Last week, Kenya witnessed an unprecedented event as youths, particularly from Gene Z, held nationwide protests in response to the increased taxes under the Finance Bill 2024.
One notable and historic incident was the breach of the country’s August House, the Office of the Chief Justice, and Nairobi’s City Hall by these protesters. Amid the protests, many people were injured, and some lost their lives. On the flip side, businesses were vandalized, and others were looted beyond recovery. As a real estate analyst, I ask myself what the sector could have lost in the short term and how it looks in the long term.
The hospitality real estate sector, such as apartment hotels, might face a slight drop in visitor numbers. The recent events have attracted global attention, potentially deterring international visitors from coming to Kenya. This would automatically mean reduced occupancy, leading to lower yields and profit margins.
In the retail sector, significant damage was witnessed as malicious protesters broke into various retail stores, making away with goods worth millions. While insurance might cover some losses, this disruption is a setback for the affected retail chains.
The damages halted business operations, resulting in lost revenue for many retail chains. Vandalized supermarkets might face disruptions in their expansion plans, which would affect the retail sector as a whole. Additionally, international investors might shy away from investing in Kenya due to the perceived political risks.
A hostile political environment can negatively impact major macroeconomic indicators such as the currency, directly affecting construction costs. In the residential sector, construction activities came to a standstill, disrupting project timelines. A prolonged standoff between the government and Gen Z could create a tricky situation, potentially affecting the delivery of major projects and, consequently, the projected profit margins.
The recent protests have both immediate and long-term implications for Kenya’s real estate sector. Several segments within the industry are likely to face significant challenges due to the unrest and resulting damage. These issues range from reduced visitor numbers in the hospitality sector and vandalized retail stores to halted construction activities and more. Therefore, it is imperative for the government to act swiftly to provide solutions and mitigate further economic damage
