The UK has emerged as a preferred investment destination for Kenya’s middle-class and the ultra-rich, who are buying houses for renting out.
Kenyan buyers are spending an average of £210,000 (Sh30.7 million) on a house in major UK cities such as Birmingham, Manchester, London, Liverpool, and Leeds, according to Britain-based property investment dealer Mark Pearson.
“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,” Pearson told Business Daily.
Pearson mainly deals in one, two, and three-bedroom apartments whose prices range from £100,000 (Sh14.6 million) to £2 million (Sh292.3 million).
The realtor also says the number of Kenyans inquiring about homes in the UK has increased, with most of them being business people and middle-class Kenyans.
“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 added.
This has been attributed to the rising number of wealthy Kenyans and the low returns on house investments in Kenya, which has forced buyers to look elsewhere.
“We focus where we get a lot of money that is why we are here. Kenya has been doing great and it’s our focus because making money out of a property is a concept that is understood,” Pearson said.
Those seeking to buy houses in the UK are allowed to pay 25 percent of the price with the remaining being paid by a mortgage company or bank. The apartments are located in major cities, making it easier for owners to rent them out.
“At the moment, apartments are delivering much higher returns. We are targeting areas that have a big difference between property price and affordability; places where the prices can grow,” Pearson said.
He added: “One of the challenges that have we have seen in the market is that you can have a comparative property price in Mombasa, as you do for instance in Birmingham. However, you have about 10 times more affordability in Britain since your tenant is on average wealthier in somewhere like Birmingham than Mombasa, which allows the rents to continue growing. The undersupply in those areas sees the property get high occupancy rates and increased rents increase property prices.”
Pearson also disclosed that the UK government offers tax relief of up to £2,500 (Sh1.83 million) to investors on the first investment.