Following our previous research, where we sought to identify the opportunities in the Kenyan counties, we are carrying out research in different counties in Kenya. We shall be releasing research notes as we progress towards a comprehensive report on the performance of the real estate sector in major counties in Kenya. This week, we started with a research note on Kisumu.
Kisumu is the third largest city in Kenya and the principal city in Western Kenya. It covers approximately 780 SQ/KM and has an approximate population of 434,661 people. The population is composed of locals, mainly of Luo, Kisii, Luhya, Nubian and Asian descents.
Kisumu Citys main suburbs are, Milimani, Riat and Kajulu, which are dominated by high-end residential developments while Manyatta, High-rise, and Airport are mid-end residential settlements. Nyamasaria, Nyalenda and Kibos areas are dominated by low-end residential developments. The CBD is the commercial hub dotted with malls, mixed-use developments and a number of hotels. The hospitality sector is also vibrant along the Lake Victoria shorelines, with hotels such as Acacia Hotel.
It has a pretty robust real estate sector whose performance is as highlighted below:
| Summary Kisumu Market Performance | ||
| Theme | Uptake | Yield |
| Mixed Use Developments | 91.0% | 9.6% |
| Retail | 76.0% | 9.0% |
| Hospitality | 50.0% | 5.6% |
| Residential | 88.0% | 4.8% |
| Mixed use developments have the highest yields of 9.6% and occupancy at 91%. Residential developments in Kisumu have low average yields of 4.8%, lower than the Nairobi market average of 5%, despite a high occupancy of 88%, as they charge lower rents compared to Nairobi. | ||
Source: Cytonn Research
The ideal development in Kisumu is thus a mixed-use development encompassing retail and office blocks. The building ought to be in a prime location in the city and offer relatively good facilities such as lifts and sufficient parking. This is because most buildings in the city are old, and do not have upgraded facilities and this is the gap that exists in this market.
The market lacks fractional office space for sale, and this is a new area of opportunity for real estate investors.
The retail sector, despite having attractive yields of 9.0% is not ideal as the city has a large supply of retail space of 650,000 SQFT, against a population of 434,661 people with an additional 270,000 SQFT in the pipeline. For the comprehensive Kisumu real estate analysis, see our Kisumu Report.
Disclaimer: The views expressed in this publication, are those of the writers where particulars are not warranted- as the facts may change from time to time. This publication is meant for general information only, and is not a warranty, representation or solicitation for any product that may be on offer. Readers are thereby advised in all circumstances, to seek the advice of an independent financial advisor to advise them of the suitability of any financial product for their investment purposes.
