Kenya’s middle class and the ultra-rich have turned to the UK to buy houses for renting out as they diversify their investments.
A Britain-based property investment dealer, Mark Pearson says Kenyan buyers are spending an average of 210,000 pounds (Sh30.7 million) on a house in Birmingham, Manchester, London, Liverpool, and Leeds in the UK.
“We are getting a lot of interest from East Africa and predominantly through Kenya. Our average purchase from a Kenyan client is 210,000 pounds,” said Mr Pearson, adding that they are also seeing an increase in the number of Kenyans inquiring about the homes.
“Most are business people, and middle-class Kenyans, which is exciting. We are seeing a spike in a lot of younger middle class or upper-middle-class and not just the ultra-elite as they are aware the world seems to have shrunk a little bit.”
He deals in one, two and three-bedroom apartments ranging from 100,000 pounds (Sh14.6 million) to two million pounds (Sh292.3 million).
The low returns on house investments in Kenya have also made buyers look elsewhere.
The dealer says for a house in UK, for instance, a return on investment ranges from 12 percent to 16 percent per year.
@johnpombe usisahau huyo ni businessman, trying to put a shine on his business. The rental return is not 12% - 16%. The return on investment is. Return on investment includes Capital Gains, which is the bulk of the return. Most people who buy a property for investment in the UK, specifically London, do so for the Capital Gains.
Rental returns are insignificant when buying a property in the UK from Kenya. Unless you are buying multiple units, or very expensive units, you’d rather leave the house empty. Think management fees (unless you want to travel to the UK every so often you will need to outsource management). Think troublesome tenants. Think repairs etc.
Rental Yields depend on location. Sijui yields za UK cities. In Germany’s major cities Rental Yield should be about 4%. so ya 14.6m x 4% = Just shy of 50k a month.
Ongeza litigation risk. Sidhani huko you can use dirty cops to evict troublesome tenants. Huku ni rahisi sana. For the right price the cops will do all your dirty homework.
Yes. If the Value of the property is 14.9m your calculation is correct.
I can see it’s a furnished acommodation, which means they are targetting short term tenants. Rental returns are usually higher on those. But management costs also go higher.
Nothing to do with Uhuru, it’s pure economics. You buy a 14.9m apartment in kilimani it gives you 70k rent per month. You buy a 14.9m apartment in the UK it gives you 160k per month.
@johnpombe is right. The returns are on rents. It can’t be on the price of homes because they don’t appreciate that much. Only way to average that high on price of homes is to build them yourself. Think about it, you buy a home at 200£ k with a 10%-12% return per annum. Which means it’s £400k after 8 years? That’s not realistic.
According to Google, rental yields in Burnley are the highest in the UK at 7%. So maybe you could be right. Real Estate they say is all about location, location, location, you buy the cheapest house on the best block.
Lakini usiangalie Rental Yield sana ukasahau ROI of a house is more than just rental returns.
Na I would never advise buying a house remotely. Finally total cost of buying the house will be appreciably higher than 11m.
Simiyu. The Return on Investment over that 8 years will be; ROI = Investment gain -Investment Cost / Investment cost.
The Investment gain will be; Investment Gain = The Total Rent Collected over the 8 years + Capital gains over the 8 years
Therefore the ROI will consider BOTH rental yield AND capital gains.
Which city is this in the UK that you allege has a rental yield of 12% - 16%?
Upper class Kenyan elites who control old money really love the UK, colonial hangover? Maybe. Meanwhile middle class na lower class do tend to prefer the US compared to the UK. You are more likely to find an MP kid in a UK university while say No 1 in Kenya in KCSE you are more likely to find him in a top US university. Ama ni juu MPs kids wanasoma IGSCE?
Citizens of other countries, for example Asians, have known about this for a long time. In Kenya you as a landlord must haggle with low income, rent skivers whereas I assume these UK tenants remit their rents on time, and are better able to absorb rent increases than average Kenyans.
100k to 2million is a world of a difference. Hapa take everything with a very large pinches of salt.
You guys don’t know shit. Sasa unaenda Burnley kununua nyumba. Good luck with that.
Ukipeana kwa management na wanajua uko Kenya, utalia. Mara ni Sunday and the drain is blocked unapewa bill ya 400 pounds.
210,000 is not really going to get you anything in London but a crappy one bed in some shitty location, if you are lucky. Birmingham prices are inflated by the high number of asians buying property but rental incomes are low. Leeds you’ll get a nice property but rental income is similarly low compared to London. Manchester is the only city on that list that I’d say 210k gets you a nice property and decent return.
The witch Thatcher started this shit by selling off social housing. The result today is a real estate ponzi scheme and a tenant in these starter buy to rent houses that 9/10 is going to be a nightmare. Ogopa sana
