A new report by Knight Frank has unveiled a trend among Kenya’s High-Net-Worth Individuals (HNWIs) redirecting their attention from foreign assets to home investments.
The report, based on responses from private bankers and wealth advisors, showcases optimism among Kenyan HNWIs regarding the growth prospects of their wealth.
62.5 percent of wealthy Kenyans anticipate increases in their wealth in 2024, with three-quarters expecting to either maintain or further enhance their financial standing according to the report.
This outlook is fueled by Kenya’s recent economic performance, with the IMF predicting a GDP growth of 5 percent in 2024, outpacing the global average.
“According to the IMF, Kenya’s GDP is forecast to rise by 5 percent in 2024, compared with a global average of 3.1 percent and an average of 4.2 percent across the world’s developing and emerging economies,” read the Knight Frank Wealth Report 2024.
Home Investments to Continue into the Future
Mark Dunford, CEO of Knight Frank Kenya, notes a resurgence in HNWIs investing in Kenyan properties.
“Kenya’s growth is bringing a resurgence in HNWIs buying Kenyan property,” he said.
This trend not only include commercial properties but also second and third homes, pointing out a shift towards domestic assets.
“This includes second and third homes in addition to their commercial property investments. Wealthy investors have also taken a step back from foreign assets in favor of building bigger positions at home,” said Dunford.
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The survey reveals that HNWIs now allocate approximately 60 percent of their wealth into homes, with nearly 30 percent acquiring a new property in 2023 and a similar proportion planning further acquisitions in 2024.
Equally, survey showed that the majority of high-net-worth individuals (HNWIs) in Kenya own less than 10% of their residential properties outside the country.
Reasons Why Wealthy Kenyans Favor Home Investments
This trend prompts questions about the factors influencing the investment decisions and risk perceptions of these affluent property owners.
Many HNWIs find a sense of security and attractive returns within Kenya, leading them to favor domestic holdings.
The convenience and familiarity of managing properties locally further contribute to this inclination, along with the logistical ease and direct oversight afforded by local ownership.
“HNWIs tend to prefer domestic holdings for security, returns, and the convenience of managing properties locally.” read the Knight Frank Report 2024 in part.
Additionally, regulatory considerations, tax implications, and the legal landscape favor domestic property ownership.
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The complexities associated with cross-border property ownership, such as compliance with foreign regulations and navigating diverse legal frameworks, may deter HNWIs from investing abroad.
Simplifying the management of residential real estate portfolios by focusing on domestic properties appears to be a strategic choice for these wealthy individuals.
Consequently, the survey which is in its 18th edition, extended its inquiry into the prospective investment plans of High Net-Worth Individuals (HNWIs) for the year 2024.
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