Eunice Macharia. [PHOTO - COURTESY]

By Eunice Macharia

The 2019 coronavirus (Covid-19) pandemic has become a global crisis affecting the lives of many people as well as the way we do business. The property industry (like other industries) has been adversely affected by the pandemic.  The government’s directives and measures geared towards controlling the spread of the virus in regards to social distancing, curfew, earlier restrictions on movement, the earlier closure of land registries and survey offices are among the measures that affected the industry adversely. The reduced or loss of income in many sectors and among individuals has also affected the industry negatively. Some of the main areas affected are:

Property Letting

The commercial and high end letting were already slow before the onset of the pandemic with a lot of voids in these areas.  Covid- 19 has made the situation worse. Companies and individuals have put on hold expansion and movement plans due to Covid -19’s disruption of businesses. Others are taking precaution due to the business environment uncertainties. Some members of the international community who normally lease the high end residential units have gone back to their countries.  By the same token, some tenants who are in the education sector (like colleges and private schools) as well as the hospitality industry have not been in operation for some months now, although they are now gradually resuming business. The exception is companies dealing with Covid – 19 related goods and services which are currently doing a lot of business. This however, is a smaller number in comparison to those that are adversely affected. This means that office and high end rentals have slowed down significantly leaving landlords with empty spaces.

In the middle and lower end of the market (which are normally occupied by the locals), the occupancy rate remains high except for those whose tenants relocated upcountry due to loss of jobs. Most tenants are however unable to meet part or full rental obligation. Given that the landlords still have to maintain the buildings and cater for utilities like water and electricity, security, garbage collection among others, it has placed a huge burden on them.

Property Sales

Covid- 19 has had adverse effects on property investments; especially sales. Loss or reduced incomes means that investors have to prioritize their spending for essentials and hold on capital expenses. Those who were considering taking loans and mortgages need to re-evaluate their position. The uncertainties around Covid -19 mean that people are not sure about the future and they will hold on huge expenses or long term financial commitments. Even banks have to re-evaluate the risks while issuing loans. This has affected the uptake of both commercial and residential sales. Low sales are affecting the investors, most of whom had borrowed funds for development.  They have therefore been forced to reschedule their loans with lenders. Some of those who had taken mortgages and loans are unable to meet their obligations or are facing delayed payments. This also applies to those who are buying properties on instalments.

Effects on liquidity and debt

Reduced transactions in real estate and increased default in rent payments has created a challenge for investors in real estate with reduced cash flows for landlords, developers and the lenders. Most of the financial institutions have been forced to reschedule their customers’ loans and this of course will result to reduced earnings for the institutions and individuals who rely on proceeds from their properties.

Effects on real estate professionals

The real estate professionals – including architects, interior designers, planners, engineers and quantity surveyors, surveyors, property valuers, property and facilities managers as well as estate agents –   have been adversely affected by the Covid-19 pandemic.  Reduced developments means less consultancy work for those involved in designing and supervising building projects like   architects, engineers, planners and surveyors. For property valuers, reduced lending means less valuation jobs for financial institutions, corporate bodies, government agencies, saccos and individuals. The property and facilities managers have to contend with reduced commissions from the rent collected, while the property agents are taking reduced income from sales and letting commissions.

Government services

The initial closure of government agencies like the land registries adversely affected   services due to interruption of the work force. Ultimately, it has slowed down planning approvals, survey works and registration of documents (for instance property transfer documents) among other services. This has directly resulted in less collection of related government revenues like approval and search fees, registration fees, stamp duty and capital gains tax among others. Moreover, it has slowed down developments and conveyance processes that are relied on by investors and professionals in real estate. Slowed court processes also mean that determination of real estate disputes has been delayed.

Government Intervention

The government has adopted measures to cushion the industry through bills and regulations. For example, it has lowered the Central Bank Rate (CBR) to 7%, and the cash reserve ratio (CPR) by 1%. This has created a window for increased funds for lending. The government also in an earlier development lowered the Value Added Tax (VAT) from 16% to 14% and this has cushioned commercial tenants. It has   also lowered the cost of buying maintenance supplies, hence bringing down the maintenance costs.  Moreover, it has lowered the cost of building materials to the advantage of developers. In the same vein, the Tax Laws (Amendment Act – 2020) allows the use of pension savings towards purchasing of residential homes.

 Immediate Steps

When it comes to rentals, many tenants have had to renegotiate with their landlords and agents to vary the terms of their leases. Some landlords have offered full or partial rent relieves for a period of time while others have allowed them to pay in instalments depending on their ability.  A good number of tenants have reduced the space occupied while others have given up their leases altogether. In the same breath, landlords have provided a blanket rent relieve to all tenants in their buildings while others are offering relief depending on the effects of Covid- 19 to the particular tenant. It is notable that some tenants are actually generating more income during this season, while for  others, (for instance civil servants) their salaries have not been reduced.

 Players in the real estate industry will need to give priority to safety above all other measures in curbing the spread of Covid-19. . This has included alterations to provide water points for washing hands and providing sanitizers for their staff, occupants and visitors. Other protective tools (   for instance thermo guns and face masks) should also be provided. This has in a way increased the maintenance costs in an environment where the rental income is dwindling.


In every adversity, there are opportunities. In real estate, those who are in a position to invest now are likely to get good deals in a market that is depressed. These include buyers for both residential and commercial properties. Tenants who need to move and expand are likely to negotiate low rentals in good or better properties as landlords are willing to take lower rentals as opposed to having empty spaces.

Those who are willing and able to borrow will have the advantage of low interest rates as banks grapple with low uptake of loans and mortgages. There are opportunities for those developing information technology (IT) solutions for real estate investors and mobile payment platforms for rent. Investment in building technologies that guarantee safety is both a current and a future opportunity.

The Future

Developers will need to re-evaluate their development plans in light of the pandemic’s effects in the short and long term. Building designs in future will need to consider the new normal of working from home and flexible working hours and provide the necessary space as well as enabling services and equipment. In addition, they will need to consider reduced demand for big space (compared to the growing demand for smaller spaces) as companies seek to reduce their footprint. Increased use of online meeting platforms means less demand for boardrooms in future. The financiers will also need to consider the new normal in assessing lending risks. There will be greater investment in information technology (IT) especially for landlords and property developers. They will need to adopt virtual means of marketing and showcasing their properties as well as   engaging their buyers and tenants. Mobile and online payment platforms will also continue to gain traction.  

In summary, Covid- 19 has disrupted many aspects of our lives. The new normal demands that we change our lifestyles by how we live, work, interact and invest. In real estate, this means we should have a fresh look at how we design, build, market, invest and manage properties currently and in future.

The writer is a registered and practising valuer, estate agent,

private practitioner and consultant in real estate. She is also the

chairperson of the Estate Agents Board and a former vice chair- Institution of Surveyors of Kenya. You may reach her on email :



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