Impact of the Standard Gauge Railway on the Real Estate Industry in Kenya

The state of the art standard gauge railway popularly known as the SGR aims to connects cities in the country and within the African region.

Impact of SGR on real estate industry

There is an undeniable relationship between infrastructure development and real estate values in Kenya.

As the population increases in Kenya, the government and private sector players are in a race to meet the infrastructure needs of the residents by providing road, rail, airport, and port improvements.

The Kenya Standard Gauge Railway (SGR) is one such investment.

The project is a railway system that seeks to connect Kenyan cities, and link the country to the neighboring country of Uganda, to South Sudan, the Democratic Republic of the Congo, Rwanda, and Burundi. There are also plans to link to Ethiopia to the north of Kenya.

READ ALSO: Kenya and Ethiopia To Build 3000Km Railway in 2025

The first segment of the project between Mombasa and Nairobi, began with the passenger rail service in June 2017, and later the freight rail service began in January 2018. Construction in other segments of the SGR is ongoing or planned.

Impact of SGR on real estate industry

The SGR has already had a huge impact on the real estate industry and is actively influencing development decisions in towns close to the project.

People are attracted in purchasing or renting properties in areas that are livable. New home buyers, especially those looking for opulent housing schemes are always on are constantly searching for established infrastructure close to the residential properties they have their eye on.

A developed neighborhood guarantees the buyer that the property will be appraised at a rate higher than current market norms.

Increase in Land Value/Rise of New Trade Centres

The construction of railroad stations such as those on the Mombasa Road, has stimulated demand for real estate, spurred development, and increased economic activity.

A rise in investor interest in the impacted counties has resulted in the development of new trade hubs and the revival of towns that were not previously thriving.

For real estate investors, this means big opportunities because higher property values and rental rates may result from it.

New Economic Hubs

Impact of SGR on real estate industry

The development of rail stations in a number of cities and towns will spur economic growth. These stations will draw trade, industry, and business as they develop into new economic centers.

For example, as they develop into important railway hubs, cities like Isiolo and Naivasha can anticipate a boom in economic activity, including manufacturing, tourism, and logistics.

How The SGR Will Impact The Real Estate Sector

Development of Further Transport Networks

The influx of people into new and upcoming trade centres has led to the necessity of investment in roads and other transport systems in the areas.  The existing infrastructure may be unable to support the increased populations and there is therefore a need to support further transport systems development.

Improved social Amenities

With improved railway infrastructure and upcoming of residential and commercial estates there will also be improved social amenities in these areas. These include better housing, electricity, drainage systems and structures such as police station amongst others.

Commercial Developments

The quality and accessibility of services, such as shopping and recreational facilities also matter. Residents are drawn in to an area due to its location’s status, physical surroundings, service availability, affordability, and convenience.

For example, Athi River is home to a number of businesses in the steel, cement, and mining sectors. This has led to an increase in population and the construction of housing developments to house them as well as shopping centers for their convenience, such as Signature Mall, Coholo Mall, and Crystal Rivers Mall.

READ ALSO: Third Longest Bridge in Kenya – Athi River Super Bridge

Urban Planning

City and regional authorities will need to engage in meticulous urban planning to ensure that the growth driven by the railway project is sustainable and well-managed. Zoning regulations, land use policies, and infrastructure development must be carefully considered to create vibrant, livable, and sustainable urban environments.

Education Infrastructure

Since there will be an influx of people residing in nearby towns, education facilities are bound to be established. There are a number of studies that have argued that school quality has a direct and positive influence on residential property values. People are more attracted to neighborhood with good schools even if it means paying higher.

The truth is that there is a correlation between infrastructure development and a real estate boom.

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