The pressure of a contracted economy has crushed the dreams of many landlords and property owners who are some of the hardest hit, according to data from the Central Bank of Kenya, which shows that real estate investors top the list of loan defaulters.
The defaults on real estate investment loans such as mortgages rose by Ksh 5.1 billion to Ksh 57.7 billion by the end of 2020.
Car owners and investors in the transport industry were also affected, with their defaulted loans increasing to Ksh 27 billion.
Mass firings and closed businesses resulted in reduced income for property developers affecting their loan repayment plans.
Restrictions in movement and social-distancing rules to curb the spread of Covid -19 hit the public transportation hard, cutting earnings for taxi and matatu (commuter public service vehicles) owners and jolting their loan repayment plans.
Landlords and transport investors are headed for tougher times as banks prepare to enforce recovery measures.
“For the quarter ending March 31, 2021, banks expect to intensify their credit recovery efforts in all economic sectors. The intensified recovery efforts are aimed at improving the overall quality of the asset portfolio.
“The main sectors that banks intend to intensify credit recovery efforts in order to enhance reduction of non-performing loans are Trade (89 percent), Personal and Household (87 percent), Real Estate (84 percent), Transport and Communication (84 percent), and Building and Construction (84 percent),” reads the CBK survey.
Since the start of 2021 local newspapers have been filled with many homes and commercial properties set for auction valued in the hundreds of millions.
From maisonettes located within gated communities in Syokimau to bungalows in Westlands to apartment blocks in Kahawa Wendani, the auctioneer's hammer spared no one.
Vehicles were not spared either, as hundreds were listed, with auctioneers jostling to make a killing.
Thousands of vehicles ranging from personal cars to heavy-duty commercial trucks have been repossessed and put up for auction.
