Foreign investment and annual trade soared by $85 billion between 1994 and 2000, helping to make Mexico the largest economy in Latin America. Its manufacturing base, buttressed by the export-oriented maquiladoras that dot its northern border, have shown marked increases of exports, nearly 90 percent of which are destined for the U.S.



Mexico experienced an economic slowdown during the past two years induced mainly by the recession in the U.S., its most important trading partner. Recovery is underway, but at a slow pace as third quarter GDP rose by a mere 1.4 percent annualized rate. Nevertheless, the economic outlook is bright as inflation is low while steady foreign investment translates into higher growth in 2003. This is good news for real estate developers, who saw their once-hot markets cool last year. It is a regular viewpoint that one can never rely on upon bank valuation and their Appraiser is regularly a preservationist one by any standard.

The South American economy faced a myriad of challenges during 2002. The weak global economy, political instability and severe recessions in Argentina and Venezuela were the primary impediments. Brazil is South America’s largest economy and ninth largest in the world.

Dissatisfied with the domestic economy, Brazilians elected their first leftist president in 2002, Luiz Inacio Lula da Silva. “Lula,” who favors slow adoption of the proposed Free Trade Area of the Americas (FTAA) agreement, wants to bolster the economy through domestic spending.

Chile remains the model of vitality in South America with sound monetary and fiscal policies and a stable political environment. But Chile began to feel economic shockwaves in 2002 as a result of its proximity to troubled Argentina.

Looking ahead to 2003, the South American economies will be polarized. Brazil, Chile, Columbia and Peru will post real GDP growth of 2.0 to 4.2 percent with reasonable inflation. But Argentina and Venezuela will face uncertainties including prolonged recession, political unrest, high unemployment and high inflation. The long-term economic prospects for South America remain positive.

The region’s assets - a sizable labor force, oil reserves, agricultural production, mineral deposits and other natural resources - remain attractive on global markets. Demand for its exports will depend on the recovering economies of the U.S., Asia and Europe. The pending FTAA agreement will have positive effects for most countries in the Western Hemisphere, but it remains a few years from implementation.

As many other continental economies remain flat, Europe continues to be a key destination for property related investments. Nearly 40% of all cross-border European property investment last year originated from the United States. While overall economic output in the European Union remained around 1.7% in 2002, comparable to 2001, it is estimated that 2003 will be a much stronger year.



Growth is projected to be around 2.4% in the United Kingdom and 2.3% in the European Union. The diversity of the European market, however, dictates that at any one time there will be multiple economies outperforming the European Average. The property valuation report will tell the definite position of the substance, by revealing its east west north and south.

These economies allow for investors to be more selective in choosing investment destinations. The top economically performing countries within Europe for 2003 are expected to be Ireland (5.3% GDP), Luxembourg (5.1% GDP) and Greece (3.2% GDP). Although there are varied reasons for their success, each of these economies has healthy fundamentals that are expected to drive growth forward.

The USA office leasing market lurched fitfully into recovery during 2004. The average Class A asking rental rate for available space, typically the last indicator to improve, ended the third quarter at $28.30 per sq ft per year full service gross. This was up by 1.7% from the third quarter of 2003, the first year-over-year gain in more than three years.

New York led all other markets with a 13.4% increase, but the gains were widespread. Twenty-seven of the 50 markets tracked by Grubb & Ellis posted higher average Class A asking rents in the third quarter of 2004 than in the third quarter of 2003. Companies, particularly large ones, have not been enthusiastic about hiring, which shows up clearly in the lackluster job growth numbers through the summer and early fall.

Consequently, the pace of the office market recovery has been weak with many tenants postponing leasing decisions until their prospects look more secure. Many of the companies that are hiring still have sublease space or shadow space to occupy before requiring any net new space. But enough companies leased space in 2004, particularly small and mid-sized firms, to stoke absorption, stabilize rents and arrest the three-year upward drift in the vacancy rate.

International property consultants Knight Frank are pleased to introduce the first edition of the Kenya Property Report. This report presents an overview of the commercial and residential property markets of Kenya, set against a background profile of the country’s economic status and structure, together with an assessment of the operational characteristics of the Kenyan real estate industry. An exact valuation of area is basic for theorists, contract banks, buyers, move down arrangements and merchants of veritable property of area.



This report is designed to be of interest to both domestic and overseas occupiers, developers and investors and places particular emphasis on Nairobi. The publication of this report coincides with the opening of Knight Frank Kenya – a joint venture between First Chartered Securities and Knight Frank.

Headquartered in Nairobi, Knight Frank Kenya offers a complete range of agency, professional and consultancy services to the East African real estate market. This report has been prepared by the Knight Frank Research Department in London with the assistance of the Directors of Knight Frank’s East African operations.

Following recession in the early 1990s, the Kenyan economy has expanded steadily through this decade. A generally positive economic climate, brought about by wide-ranging liberalization measures, has facilitated rapid property market expansion over the past five years and given the necessary political accommodations, this looks set to continue in the years ahead.

Powerful forces of change have and will continue to shape the Kenyan social and economic landscape. Multi-cultural demo -graphic growth, rapid urbanization and infrastructure overload represent major challenges to the authorities. Regardless of political complexion, the completion of the Elections late last year should ensure administrative continuity.

Successful investment in Kenya is predicated upon the ability to understand a complex and dynamic commercial and cultural environment. To attract such investment, the authorities must demonstrate stability and cohesion.

Real estate is a dominant investment medium in Kenya with ownership an important collective and individual objective. Asset weightings are as high as 25% and more. This partially reflects the positive returns associated with retaining developed assets in recent years.

Building quality varies significantly with the stock of Grade A office space being restricted. Vacant supply is extremely low with all developments committed for occupation close to practical completion. Most occupiers seek to upgrade their accommodation and this drives the leasing market, together with new investment and expansion in line with the economic cycle.



As in many cities, Nairobi CBD has declined as the commercial hub of the country. Declining infrastructure, congestion and falling security have conspired to bring about rapid and extensive development in suburban locations with the prime property market now concentrated in existing locations such as The Hill and Westland’s, together with emerging locations further out such as the planned Office Park and Retail Centre in the Racecourse area.

Current development activity is concentrated in Nairobi CBD, Westland’s and The Hill. Rental growth, off a forthcoming suburban benchmark of Kshilling 500-550 per sq m per month (US$8.40-9.20), will be strongest out of town and will continue to stimulate development activity. Property valuation procedure serves to settle on decision as to our property that whether you bring to the table it or wan to make it more worth for offering reason.

Foreign retailer market penetration is minimal although set to increase, probably led by South African interests. The Asian dominated retail trade of Kenya’s CBDs now faces a mounting challenge from rapidly emerging suburban locations which, in the interests of decentralization, are generally encouraged by the authorities.

Mixed use developments which provide an enclosed retail environment, car parking and security, sometimes with offices on upper levels, are currently a principal focus of South African interest. This type of space will push rental levels up beyond Kshilling 1,000 per sq m per month (US$16.75).

High specification levels are of paramount importance in a market where top rents are currently around Kshilling 125,000 per month (US$2,100) for a prime, three or four bedroom apartment. Whilst GDP in 1997 was affected by poor weather conditions which impacted on the agricultural sector, current forecasts suggest GDP growth of 3-5% over the next five years. On this measure, the Kenyan economy is actually contracting slightly.

Despite many years of Independence, good comparative economic growth and relative political stability, the country clearly still faces a considerable challenge in meeting the social and economic aspirations of a large and growing section of the population. Whether you are pushing your house valuation for mortgage purpose or not it is innovatively a pressing errand for you to figure your propertys expense.



Kenya has some 42 recognized African tribes contained within its census designation profile. After this, comes a group of tribes, each with 10-15% of the population, principal amongst which are the Luhya and Luo. Considerably less than 1% of the population (numbering around only 30,000) is of European origin despite Kenya’s colonial past.

An understanding and appreciation of the cultural and ethnic composition of Kenya, which includes a dynamic, urban based business community of Indian origin, is an essential ingredient in successful commerce.

Nairobi and Mombasa are by far the country’s largest cities with unofficial populations of approximately 2.75 million and 800,000 respectively. This, allied with rapid demographic growth, the shifting fortunes of the physical and fiscal aspects of the rural economy and the informal trade characteristics of urban enclaves, has fostered rapid in-migration into urban areas.

The urban population is now at least doubling every ten years. Redevelopment within existing urban areas and a concomitant increase in densities has also placed great strain on the existing urban fabric. Unplanned, informal and poorly serviced fringe settlements around the major towns and cities, particularly Nairobi, represent a growing challenge for the authorities.

Increasingly, the maintenance and improvement of the existing fabric is also giving cause for concern. Nairobi province now contains more than a quarter of the entire salaried job market of the country and a similar proportion of the total number of people working in the informal, unregistered sectors. The nature of the Kenyan electoral system inevitably produces an economic landscape interrupted by periods of political uncertainty and mild civil unrest.

Corruption, at all levels, is deep seated almost to the extent of being systematic and woven into accepted procedural norms. Social, economic and infrastructure provision typically break down at the interface between elected officials and the civil service. Civil service structures are typically large and bureaucratic with civil servants accounting for some 13% of the total working population. Property valuation controls differentiating full house to see that it’s seen as cost in the current zone field.



FHowever, policies and plans can be easily set aside by powerful political influences. Concern and controversy mounted in the latter part of 1997 as the country approached the late-called December 28th Election. The re-election of the KANU administration, headed by President Moi, for a consecutive and (for Moi) final term, was inevitably not welcomed universally.

From a business viewpoint however, a consensus view suggested that continuity and stability should take precedence over a fragmented and untried political opposition, but that a broadening of appeal would be needed if a single party administration, supported by less than half the vote, was to retain credibility over a full parliamentary term.

The Nairobi real estate market has been a direct beneficiary as a result of the city’s growing regional, perhaps wider, dominance of a more freely trading environment. A more liberalized trading environment has fostered a significant expansion in stock market activity over the past 3-4 years. The number of share transactions on the Nairobi Stock Exchange has roughly quadrupled since 1994 and is up by nearly a factor of ten on the volumes recorded at the start of this decade (see Figure 4).

At the same time, market capitalization and the Share Index have both escalated dramatically, peaking at an unsustainable level in 1994 followed by falls in 1995 and a subsequent leveling off. This very high ratio explains the burgeoning informal sector and the stubborn nature of the unemployment profile in recent years, despite improved economic conditions. Like many emergent economies, Kenya offers a volatile interest rate climate benchmarked around levels far higher than those found in the developed west.

Subject to rapid and constant revision, loans secured off of base rates under 25% are currently to be considered competitive in Kenyan terms. In common with many other African nations, Kenya has a turbulent and highly varied inflation history. Inflation has been running at around 10%, its lowest level for a number of years, but is now rising.



Month-on-month measures and three month rolling indexes can and frequently do show inflation running at anything up to 35%+. In particular, Kenya generally represents a positively geared economy. The high cost of borrowing has deterred over speculative borrowers. Bank deposits have far exceeded aggregate loan values by a considerable margin throughout each year of the 1990s. The reason the valuation is so critical in an insolvency documenting is this is the thing that the trustee uses to check whether there is sufficient nonexempt property to warrant offering it to separation the returns among the lenders visit at www.melbournevaluers.net.au.

However, the current rate environment means that the returns on cash can exceed those on property by a substantial margin. Trade patterns in and out of Kenya have changed dramatically over the past five years as a result. Exports to the Far East and Australasia have however, now overtaken Europe and represent the country’s second most important export market. In terms of imports, reforms in South Africa have created a dramatic influx of South African goods and services. From negligible levels five years ago, South African imports now rank second only to the UK and Japan in value terms. Shifting trade patterns have had a direct impact on the property market in all 0sectors.

A dramatic upswing in South African real estate investment, for example, is now anticipated. Overall, the economy of Kenya is clearly both complex and rapidly changing. It is also volatile, although less so than many other African nations. Future commerce and property investment will be predicated upon the successful interpretation of economic change.

If the political arena settles, the country’s economic prospects could look increasingly positive. New investment, to take advantage of new markets and opportunities, will continue to strengthen the property sector in the years ahead. Kenya’s current National Development Plan (1997- 2000), produced by the Government, is more international and commercial than previous Plans and is also more positive than at any other point this decade.

In African terms, the Kenyan property market is both large and well established. It is also relatively sophisticated in terms of its operational characteristics and financial structures. With the concept of ownership deeply ingrained in the Kenyan psyche, a disproportionate amount of the country’s wealth is tied up in property.


Whilst this creates a substantial investment trading market and also means that institutional portfolios contain a spread of assets across different centers and sectors, the fact that most assets are concentrated within Kenya leaves the institutions with vulnerable risk- return horizons. Portfolio diversification and spread of risk outside Kenya are thus two issues currently facing the market, although the Insurance Act does not permit the investment of Insurance Funds outside Keyna. Our licensed valuers Completing all the transactions related valuation solutions for buying or selling properties.

With exchange controls now removed, an increase in foreign investment, particularly in Uganda and Tanzania, is both expected and necessary. In spite of a large institutional market, the property sector has, on occasion, suffered from lack of liquidity. Most developers and institutions operate on the basis of developing in order to retain assets for their ongoing income flow rather than developing to trade and realize capital profit.

Commercial leases are typically for six years with rent reviews every two years. Reviews can be either to open market or via pre-agreed escalation rates contained in the original lease. The latter approach tends to prevail, but the length and structure of leases are tailored to avoid out dated rent restriction legislation that militates very strongly against landlords. Building quality and specification vary dramatically. Overall, the market lacks prime, well specified accommodation.

A considerable proportion of the leasing market comprises occupiers upgrading their premises. The turnover of space is thus relatively high with new, additional demand related to the economic cycle. Air conditioning is not standard and very few buildings offer this facility in what is a very benign climate. Air conditioning is not standard and very few buildings offer this facility in what is a very benign climate.

High rise development in the 10-30 floor range has a 30 year history in Nairobi, but unreliable services and high duties on imported items such as lifts, are now creating disproportionate costs as owners are forced to install full load, stand-by power and guaranteed water systems, along with more sophisticated security measures. In common with many similar markets, decentralization of the real estate sector away from the CBD is well established and gathering further momentum.



Congestion, low building quality, infrastructure over-load and falling security and safety levels are pushing occupiers into more suburban locations, although the implementation of the Urban Transport Study recommendations could revive failing addresses. In Nairobi, the private sector commercial core is increasingly moving to The Hill and other residential areas to the north and west of the CBD.

The CBD is moving down market, although several of the best known streets are, and will remain, a key Government and Civil Service enclave. Development levels and prices are at their highest in non-CBD areas. Both the office and retail markets are shifting to suburban settings. House Valuations solutions to get an estimated value of the residential property valuation Sydney.

Whilst City Plans are prepared, the operations of the planning process are based on participation rather than regulation. Detailed zoning systems are in place but these can and do respond to commercial and/or political pressure. Of particular concern is the need to plan for a population growth rate now running at around 10% per annum? Increasingly, there is a presumption against detailed physical planning which is viewed as a limiting constraint on economic growth and progress.

With the planning authorities handling only around 30% of actual development in Nairobi, the Kenyan system is effectively based on encouragement and guidance. This has enabled large tracts of unplanned and unregulated development to emerge around the major towns and cities, especially Nairobi. Many occupants in these areas have been granted title over their buildings via blanket approvals in order to bring them into the economic/political mainstream, create a tradable investment product and foster a vested interest in building maintenance and upkeep.

Whilst difficult to measure accurately, non residential development levels in Nairobi have been steadily rising over the past 3-4 years. The purpose built market in Kenya is limited, making the majority of construction speculative. Despite low vacancy rates, most occupiers will usually only commit to a building as it nears practical completion or is finished.

Tenants tend to be cynical about developers’ time and quality statements and calculate that the threat of unoccupancy provides a bargaining lever as a scheme nears completion. Reflecting inflation, labor costs and raw material price increases, construction costs in Kenya have increased steadily through this decade, including the recessionary years of 1992/3. property valuers perth before buying or selling process of property with affordable prices.

The contractor sector is well developed and dominated by Asian interests. Construction and rental prices have been converging and some developments may prove to be uneconomic at the level of specification planned. From the Estate Agents Act, commercial letting fees to agents are benchmarked at 7.5% of the first year’s rent with market competition typically bringing this down to 5%.Sale fees, paid by the vendor, are usually set at around 1.25%.Whilst not statutory in all circumstances, an annual valuation cycle has become the norm for major funds and investors.

As in most African nations, the property management sector is the process of growing and evolving. The institutional community is currently split on the issue of management in- house or management via third party service providers. Historically, in-house management has often been preferred in the interests of cost control and confidentiality. However, this attitude is gradually giving way to a more commercial view which sees a proper and direct link between value retention and enhancement and efficient, cost-effective asset management.

The management community is growing and strengthening in consequence, although a service that goes beyond rent collection and house-keeping is not yet commonly understood. Less regulated and less well supported is the emergence of a growing market in corridor developments along major route ways.

In Nairobi, for example, there has been extensive development along the airport highway in a wide variety of low density, low rise formats. As yet however, the embryonic nature of this form of development, together with regulatory considerations, has prevented the emergence of an institutional market in these areas. The division of the city in to self-governing boroughs is currently mooted, but may only serve to widen economic disparities.

An ongoing programmed of privatization will create further development opportunities and increase liquidity in the market in the years ahead. The office sector in Nairobi is a market in transition. Over the past five years, good economic growth has fostered an upturn in development and investment activity which has considerably increased the supply of office accommodation in the city.

However, whilst supply and demand has generally remained in near-equilibrium on a city-wide basis, significant discrepancies between supply and demand have occurred and continue to arise at a localized level. The successful interpretation of such local factors is essential in viable office development and investment programmers. The recent upturn in office development and investment is traced back to the early 1990s recession and the last round of Elections and the inevitable pause in the market this engendered in 1992. Our expert guides will help you understand clients valuation requirement and preparing valuation reports.

Despite local variations and occasional years, the delivery of new office space to the Nairobi market has risen steadily (see Figure 8). From less than 50,000 sq m in 1992, annual office completion rates (including schemes with minor retail elements) had risen to well over 100,000 sq m by the end of last year. Of this, around 45% (274,000 sq m) has been completed in the CBD and 55% (337,000 sq m) in the decentralised market.

The off-centre market is therefore expanding in volume terms at a faster rate than the traditional, downtown sector. Average annual completion levels in the CBD and decentralised market this decade have been around 34,250 sq m and 42,150 sq m respectively.

The decentralised market may be divided into two types of location. Firstly, established areas (Westlands and The Hill) and secondly, emerging concentrations (Muthaiga, Parklands, Waiyaki Way, Hurlingham, Kilimani and Ngong Road). Westlands and The Hill dominate the off- centre market and look set to emerge as the principal private sector office foci of the city.

Although difficult to measure precisely, there were approximately 112,775 sq m of office development either under active construction or at the site preparation stage in the three principal Nairobi sub-markets (CBD, Westlands and The Hill) as at January 1998. By sub-market, some 51% (57,350 sq m) of this space was within the CBD, 15% (17,325 sq m) in Westlands and 34% (38,100 sq m) in The Hill area. In the longer term, the Nairobi Racecourse development a 30 acre mixed-use scheme comprising a 22 acre office park (the fi rst of its kind in Kenya) and an 8 acre retail park – will significantly enhance and redefi ne the suburban market, providing a natural destination for occupiers seeking to exit the CBD.

The current office supply figures are however, also somewhat distorted by the Central Bank of Kenya (CBK) development in the CBD. This 40- storey, 36,000 sq m office tower has been under construction for some four years and was originally designed to be the Central Bank’s headquarters. Our dedicated staff of qualified conveyancers do nothing else but Property valuers.

To be the tallest building in East Africa when completed in late 1998/early 1999, this building is now however, totally surplus to The Bank’s requirements. Renamed Times Tower, it threatened the supply position before being allocated to the Kenya Revenue Authority in late 1997. Times Tower alone accounts for a little over a half of all active office development in the CBD and with the large GPO HQ also nearing completion, points to the down town dominance of Government and Parastatal buildings in the current cycle.

Demand and take-up patterns in Nairobi are a direct reflection of supply trends. In a volatile, high inflation, high interest rate and vulnerable currency climate, it is not always easy to discern accurate and coherent rental trends. In Nairobi, the magnitude of office rental growth over this decade varies considerably in relation to currency. As Figure 9 illustrates, rental growth in Kenyan Shilling terms has been steady and consistent over the past 7-8 years. However, when rebased into US Dollars, the market becomes far more flat and even shows marked decline in certain years.

In Shilling terms, the Nairobi office market has produced annualised growth of 13.5% over the period 1989-97 but in US$ terms, this measure falls to only 0.9%.This has obvious and profound implications for the way in which developments are financed. In Dollar terms, the Nairobi market has shown only modest rental performance at best. In the considered view of Knight Frank though, selective upward rental adjustments in non-CBD locations seem inevitable as a result of under-supply and lagging performance. Not surprisingly, Nairobi exhibits a wide spectrum of office rents which vary in relation to both building quality and location.

The cost of conveyancing sydney is without any doubt quite high but it is worth paying the price because there are thousands or even millions of dollars at stake when you buy and sell properties. In general terms however, modern CBD accommodation may be expected to quote at around Kshilling 30-35 per sq ft per month (325-375 per sq m), prime suburban accommodation Kshilling 40-45 per sq ft per month (430-485 per sq m) and the very best new developments in Westlands and The Hill now close to Kshilling 50 per sq ft per month (540 per sq m).

In a market in which prime investments only change hands infrequently, comprehensive yield data does not exist. In the CBD, much will depend on the outcome of a number of potential sales which are currently being offered, and will be offered, to the market. An exodus of the private sector from the CBD is likely to push yields well into the early teens.