Sharp Daily
No Result
View All Result
Wednesday, October 15, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Investments

The drawbacks of investing in real estate in Kenya

Faith Ndunda by Faith Ndunda
January 16, 2025
in Investments, Money
Reading Time: 2 mins read

Investing in real estate in Kenya has long been considered a lucrative venture with the average return ranging from 8.0% to 30.0%, depending on property type and location. However, potential investors should be aware of several drawbacks that can impact profitability.

Real estate can offer substantial returns with the average rental yield in Kenya is approximately 7.5%. This can vary based on factors such as property location, type, and market demand. In some cases, returns may be lower than expected, especially in areas with less demand or oversupply.

Achieving 100.0% occupancy is challenging. Vacancy rates can fluctuate due to factors like economic downturns, increased competition, or seasonal variations. Periods of vacancy directly affect rental income, making it difficult to maintain consistent cash flow. This can lead to periods where rental income is lower than expected, impacting the overall profitability of the investment.

Property ownership entails ongoing expenses from maintenance costs and property taxes. Maintenance costs can be substantial, covering repairs, renovations and general upkeep to ensure the property remains attractive to tenants. Additionally, property taxes are a recurring obligation that can increase over time, further impacting net returns. The rental income tax is 7.5%. Investors must budget for these expenses to avoid financial strain.

RELATEDPOSTS

Real Estate project financing models shaping successful developments

September 12, 2025

Why Syokimau, a satellite town is attracting real estate investors

September 18, 2025

While real estate is often considered a hedge against inflation, rent increases may not always keep pace with inflation rates. When inflation increases, landlords may find it challenging to raise rents proportionally due to market competition and tenant affordability constraints. This means that even if property values appreciate, the rental income may not increase proportionally, leading to a lower real return on investment.

The real estate market is subject to economic conditions, political stability and changes in regulatory policies. Economic downturns and political instability can lead to decreased property values and demand, affecting both rental income and the potential for capital appreciation. Investors must be prepared for market fluctuations that could impact their investment’s performance.

Investing in real estate requires significant upfront capital for property acquisition, legal fees and initial renovations or improvements. This high entry barrier combined with the regulatory constraints can be a drawback for many potential investors, limiting opportunities to those with substantial financial resources.

While investing in real estate in Kenya can offer substantial rewards, it’s important to be aware of the potential drawbacks. By carefully considering these factors and planning accordingly, investors can make informed decisions and mitigate some of the risks associated with real estate investment.

Previous Post

The rise of the gig economy in Kenya: Opportunity or exploitation?

Next Post

The role of mutual funds in long-term wealth building in Kenya

Faith Ndunda

Faith Ndunda

Related Posts

Investments

EABL to redeem KES 11.0 billion medium-term notes ahead of schedule

October 14, 2025
Investments

Kenya’s 2028 Eurobond Buyback marks a turning point in debt management

October 14, 2025
Investments

Kenya shifts to bond financing for SGR and JKIA expansion

October 13, 2025
Money

Kenya’s NFIS 2025–2028: Advancing financial inclusion and well being

October 13, 2025
Investments

Kenya Pipeline IPO deadline extended to 2026 and what it means for the Privatization Agenda

October 9, 2025
Analysis

Valuation multiples

October 9, 2025

LATEST STORIES

StanChart Kenya retirees face fresh legal stalemate over KES 7.0 billion pension payout

October 15, 2025

U.S. bank earnings take center stage amid government data freeze

October 15, 2025

Anatomy of a bear market

October 15, 2025

Community-driven solutions to Kenya’s growing hunger problem

October 15, 2025

EABL to redeem KES 11.0 billion medium-term notes ahead of schedule

October 14, 2025

Kenya’s 2028 Eurobond Buyback marks a turning point in debt management

October 14, 2025

COMESA’s digital retail payments platform enters trial phase

October 14, 2025

Embedded finance: The future of seamless financial services

October 14, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024