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The People Friday Date: 13.01.2017 Page 23 Article size: 735 cm2 ColumnCM: 163.33 AVE: 206126.66 11 D r O now threate turns averaging 25.8 per cent across all themes, with the best performing areas being retail and offices with average yields of 10 per cent and 9.4 per cent, respectively, according to Cyntonn. Analysts say elections always affect markets all over the world and Kenya is no exception. Fears about a change of government creates insecurity, resulting in a volatile environment. Elections could also lead to a slow could break out," warned Cytonn In vestments Real Estate Services Man ager, Johnson Denge, in an interview with People Daily. "Apprehension makes one adopt a waitandsee attitude. Political uncer tainty does not auger well for the market if the past is anything to go by. Prices and rents are expected to tumble," he said. likely to experience shocks in the run up to this year's Property developers at the Coast concur, saying the political season is signaling a threat to the growth of property markets. Goldwyne — a real estate consulting firm — CEO, Benedict Mutuku, said some buyers are scared of purchasing properties at the Coast. "The markets are already a bit slow; General Election. we are in a waitandsee situation dur by Wahinya Henry and Harrison Kivisu J^PeopleDailyKe V layers in real estate are predicting the sector is They say a sluggish economy caused by heightened po litical campaigns could jolt the market, particularly in the second half of the year. There are fears also some inves tors may take advantage to make a kill by cashing on the uncertainty. Schemes are being hatched to buy property at lower prices for disposal at higher prices once normalcy returns af ter the elections. "It can even be worse for investors and developers who ar rive at the conclusion election violence down in certain markets, especially in areas affected by political tensions in the past. "Other constraints likely to im pact on real estate development during the year include high land and construc tion costs," says Denge. According to HassConsult, high land prices in Nairobi have seen develop ers move to the outskirts where land is cheaper. Whereas an acre of land in Donholm costs about Sh60 million and Sh40 million at Mlolongo, a similar par cel in Juja goes for Sh10 to Sh15 million. developments viable in satellite towns — water, electricity, security and roads. Following the poor performance of Reits (Real Estate Investment Trusts) at the Nairobi Securities Exchange last year, investors are likely to shy away from the capital markets. In addition, banks are less likely to advance loans to small and mediumsized companies with the low interest rates capped at 14 per cent per year, preferring instead to lend to the government and big firms. Cyntonn says increased supply in some sectors such as the upper mid end residential sector will result in com petition, lowering returns for investors. The office sector is also likely to experi ence high competition, with the increas ing office space supply in Nairobi's key nodes such as Upperhill and Westlands. This could lead to lower occupancy and thus lower yields for investors. Politics aside, experts predict the sector will continue to prosper. "Invest Construction costs will nevertheless ments in the real estate are still attrac remain high, as developers have to in tive. Despite a few constraints, growth cur infrastructural costs to make their of businesses, increased infrastructural development and improved operating and legal environment are expected to drive real estate investments in 2017," says Caleb Mugendi of Cyn ing this political season. The few who buy houses are opting for three bed room apartments and below going for Sh10 million or less," said Mutuku. However, MwendaThuranira, CEO for MySpace Properties Company of Mombasa, is more optimistic. "The political temperatures will at some ex tent— though not much— affect the property business. But as property de velopers, we are optimistic of the ever growing industry," he said. In 2016, real estate delivered high re Ipsos Kenya Acorn House,97 James Gichuru Road Lavington Nairobi Kenya tonn.