Kenyans are buying land differently due to shifting credit market

In recent months, real estate companies especially those selling affordable land have taken on new methods of selling property.  Installment plans have now become one of the fastest methods for buying land in Kenya and an attractive hook for new landowners.

A report by Property Reality Company (PRC ) shows that  over  80% of real estate firms do not have credit partnerships with financiers, leaving only 18% whom are mainly backed by banks and SACCOs.

In order to remain competitive, there was an increase in the proportion of firms offering installment purchase by 13% to 87%, with 61% allowing payments of up to 3 months. Cost (Amount and repayment flexibility), is an important criterion consumers use to select real estate providers

With installment plans starting from as little as 10,000 shillings a month, real estate firms have had to up the ante in a tight interest rate regime that has forced banks to rethink their income, as interest income comes under pressure

Within the period under review the number of real estate companies that allow installment payments have increased by 17% to 87%.

The number of real estate companies that have not partnered with financial providers has increased by 6% to 18%, perhaps pointing to new ways of finding financing, such as buying using installments.

The report also shows that Kenya Commercial Bank and Equity bank are the leading banks to have partnered with real estate firms in provision on financing for land purchase at a market share of 26% each while Housing Finance comes 4th  at 13%.

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According to the General Manager, Abraham Murithi, “Land buyers, from the research we carried out consider access roads, electricity, beacons and water as the most important factors when buying property”.

Gathoni Kuria

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