The Influence of Diaspora Remittances on Kenya’s Real Estate Market

Diaspora remittances drive Kenya’s real estate growth, funding housing, commercial projects, and town development while boosting infrastructure and the economy.

Effect of Diaspora remittances on real estate
  • Diaspora remittances play a fundamental role in different industries.
  • Urban areas like Nairobi, Kisumu, Mombasa, and even smaller towns have seen a surge in property development.
  • Many Kenyans abroad invest in building or buying homes for their families back home.
  • With proper planning and safeguards, remittances can continue to transform Kenya’s real estate landscape for years to come.

What are diaspora remittances? Simply put, these are money transfers sent home by people living abroad. Though there isn’t accurate data on the number of Kenyans living in countries abroad, data from the Central Bank of Kenya  show that Remittances in Kenya averaged $143,532.56 from 2004 until 2024, reaching an all time high of $437,182.04  in October of 2024.

Diaspora remittances play a fundamental role in different industries. However, today we focus on the impact they have on the real estate industry. As evidence depicts, the real estate market in Kenya has been on an all time high. Year after year, the industry continues to grow. Urban areas like Nairobi, Kisumu, Mombasa, and even smaller towns have seen a surge in property development. A big reason for this growth is the money sent by Kenyans living abroad. Here’s how remittances drive the real estate boom:

READ ALSO: Diaspora Investing in Kenya – Real Estate Investments

Increased Demand for Housing

Many Kenyans abroad invest in building or buying homes for their families back home. Others purchase property as a way to secure their future, should they ever want to move back home, while others do it to diversify their investments. This demand has fuelled the construction of residential homes, apartments, and gated communities across the country.

Development of Commercial Properties

Apart from residential properties, remittances are also used to develop commercial buildings such as malls, office spaces, and mixed-use developments. Diaspora investors in collaboration with established developers take part in these undertakings so as to cater to Kenya’s growing urban population and thriving business environment.

Revitalisation of Smaller Towns

Smaller towns like Nakuru, Eldoret, and Thika are becoming new hotspots for real estate development. Diaspora investments are key in turning these towns into urban hubs with better infrastructure. Lower land costs in these towns make them attractive for investors, while growing populations drive demand for housing, commercial spaces, and amenities. Infrastructure improvements, such as roads, schools, and hospitals, often accompany these developments, enhancing the towns’ appeal. Local governments also support this growth by fostering investment-friendly policies.

Boosting Real Estate Financing

The inflow of remittances has encouraged financial institutions to offer better mortgage products and housing loans due to increased liquidity. This has made it easier for individuals to access financing and invest in real estate.

Support for Infrastructure Development

Remittances indirectly support the growth of infrastructure such as roads, electricity, and water supply. As more properties are developed, the demand for improved infrastructure increases and this eventually leads to broader urban development within specific areas.

The boom in the real estate market has had a ripple effect on other industries. Construction companies, material suppliers, architects, and interior designers have all benefited from the increased activity in property development.

    Challenges Facing Diaspora Investors. 

    Despite their contributions, Kenyans abroad face several challenges when investing in real estate:

    1. Fraud and Scams: Some individuals have lost money to fraudulent property deals or unreliable middlemen.
    2. High Costs: The rising cost of land and construction materials can make real estate investments expensive.
    3. Limited Knowledge: Some diaspora investors may lack up-to-date information about Kenya’s real estate market, leading to poor investment decisions.
    4. Legal and Regulatory Issues: Navigating Kenya’s legal and regulatory framework can be complicated, especially for those unfamiliar with the process

    Conclusion

    Diaspora remittances are a driving force behind Kenya’s thriving real estate market. These funds not only provide housing for families but also contribute to urban development and economic growth. However, to maximise the impact of remittances, there is a need for better transparency, trusted investment channels, and education for diaspora investors. With proper planning and safeguards, remittances can continue to transform Kenya’s real estate landscape for years to come.

    Lulu Kiritu
    WRITTEN BY
    BuyRentKenya
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