Cytonn Investments has released its 2019 Market Outlook, which predicted a generally positive landscape for the country’s economy this year.
According to the report, Kenya’s GDP could grow by between 5.7% and 5.9% due to advancement in various sectors, including real estate, tourism, manufacturing and agriculture.
The Kenya shilling is expected to be stable, ranging between Kshs 101-104 against the dollar, because of sufficient CBK reserves and increasing diaspora remittances.
Interest rates are also expected to remain relatively stable.
In private equities, it was noted that industry-specific needs would drive growth in various sectors.
For example, the demand for quality education and untapped potential in credit extension for Fintech will continue to attract private equity investors.
Similarly, the cheap valuations in Kenyan equities market should continue attracting foreign investment.
However, concerns still remain about Kenya’s debt sustainability and the revenue collection capacity by KRA. As such, investors are encouraged to look towards medium-term fixed income instruments as opposed to short term ones.
In real estate, some sectors such as mixed-use development, land and hospitality are expected to do well.
Other areas, such as commercial office sector and listed real estate could perform poorly. Residential and residential real estate are expected to remain neutral due to stagnating occupancy rates. Infrastructural development is also predicted to remain constant as a result of a reduction of budgetary allocation for infrastructure developments.
Nevertheless, the planned developments such as roads, sewer connection in Ruiru and Kitengela, water improvement programme and proposed light rail will continue to be executed, and this will allow for higher density construction and boost real estate.
The report added that affordable housing would be a major area of focus in 2019, as well as mortgages, adoption of technology and sustainable developments.
Cytonn also stated that developers would most likely continue to face high costs but this could change if the interest rate cap is lifted or if other financing methods become available.
Read the entire report here.
