Nairobi – Kenya’s wealthy have identified healthcare and retirement property as the most interesting areas for commercial real estate investment in 2020, according to Knight Frank’s Wealth Report Attitudes Survey issued today.
In a survey of wealth managers across Kenya, 27% reported that their clients were planning to invest in commercial property in 2020.
When asked which segments of the commercial property were becoming more interesting for wealthy investors, health and retirement property topped the league table, with 100% of managers saying the segments were becoming more interesting, as Kenya’s population over-55 now passes 3.5m people.
Ben Woodhams, Managing Director Knight Frank Kenya, said: “The need for more care and retirement facilities in Kenya has been largely overlooked until now, but as The Wealth Report 2020 Attitudes Survey shows, the country’s expanding elderly cohort, growing middle class, and ongoing rural-urban migration, is creating new needs for such facilities.”
Commercial property in healthcare and retirement typically spans care homes and daycare centres, private hospitals, acute hospitals and surgeries, dentists’ surgeries, pharmacies, supported living and retirement villages.
Retirement villages, which have been a rising asset class globally, most often create clusters of residential properties in beautiful surroundings with on-site caretakers, medical facilities and medical staff. The villages also often provide servicing of the homes, across laundry, cleaning and, in some cases, catering.
Andrew Shirley, Editor of The Wealth Report, said: “As elderly parents become further removed from their adult children as a result of migration, and professional lives put families under more pressure when faced with taking care of the elderly, retirement villages can often provide an ideal solution for everyone, leaving the elderly in their own homes, but with ample support.”
Conversely, the real estate segment drawing the slowest growth in High Net Worth Individual interest is now industrial property, which was recently the golden child of the sector. Industrial property typically spans factories, industrial parks, light industrial properties and warehousing and has drawn a series of large new investors in the last two to three years, which may account for the relatively subdued interest in the sector in 2020 as the current investments bring a step-change in the volume of new industrial property coming to the market.
Kenya’s rich are also showing relatively less interest in investing in property debt than in other areas of real estate.
However, 2020 has delivered a renewed appetite for residential real estate investments, with 80% of the wealth managers reporting their clients had an increased interest in making commercial investments in residential properties. They also reported surging interest in student housing, which has been a hotspot of new activity in recent months, recently establishing a funding precedent when Kenya’s first green bond was launched to fund student housing.
Property market investment appetite(taken from The Wealth Report Attitudes Survey 2020)
Are the following sectors becoming of more interest to your clients?
% respondents who selected each option, Kenya
Student housing 77%
Development land 69%
Property debt 30%