Tourism to Drive Rental Yield for Holiday Homes in Kenya

The developer of a real estate project on Kenya’s coast is hinging hopes of high rental yields on the thriving tourism sector. Hello Properties, the developer of Mandharini resort, says buyers of the holiday homes are guaranteed high returns, pegging the projection on a feasibility study for the development carried out by King Sturge, an international property management consultant.

Sturge projected the real estate development will deliver at least 11 per cent in rental yields annually, coupled by a five per cent value appreciation. The resort is set for construction on 150 acres of land in Kilifi at the Kenyan coast. Rising tourist numbers have raised hopes for higher occupancy rates on the back of strong demand for holiday accommodation.

Kenya’s Tourism ministry last month said the country recorded a 13.5 per cent increase in number of tourists in the first half of 2011 to 549,083 from 483,468 in a similar period in 2010. Tourism earnings effectively jumped by Sh10 billion in the first six months 2011 to Sh40.5 billion from last year’s Sh30 billion, according to figures from the ministry.

The ministry anticipates more visitors into the country and higher earnings this year as the peak period starts. Demand for accommodation is usually at its highest with occupancy rates tottering at near 100 per cent. The resort will be run by an international operator that will rent out the houses for short-term holiday lettings, and provide international and regional marketing as well as property management services. “Mandharini is a unique development that combines the best of Kenya, nature, culture, hospitality and lifestyle,” said Friso Abbing, Hello Properties director.

The 120 units of 2-3-4 bedroom villas are on sale for between Sh30 million and Sh70 million. Available details show holiday retreats in the Kenyan market currently cost between Sh20 million and Sh155 million. Demand for luxury family holiday packages which has been on the rise in recent years has also pushed up values for holiday retreats, bush houses and private game ranches as investors seek to tap into the lucrative property class.

In an earlier interview with the Star, Nicky Shah, head of sales and marketing at LL Travel, said the market for holiday homes rentals is competing with the hotels category with near 100 per cent occupancy rates in high season. Rent for holiday homes ranges between Sh5,000 and Sh60,000 a night depending on variables such as the size of the house and services attached.

Current trends show occupants of these homes are increasingly looking for reasonably priced family packages that do not compromise on quality for the family experience. Clients reportedly find holiday homes more attractive because most packages come inclusive of food and accommodation, offered in preferred choices just like in their homes. Investors eyeing tourist accommodation are seen gaining confidence as investments in coastal properties, game farms and ranches gain momentum.