March 31, 2025

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Timely – Precise – Factual

Investing during an election year? It’s a 50-50 risk

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Local investors in real estate have in the past years frozen their projects during election years. They adopt a wait-and-see attitude, especially after the 2007 polls tore the country apart leading to wanton destruction of property, loss of lives and a tattered economy.

The script may be the same this year, with the polls barely five months away as politicians continue crisscrossing the country to drum up support for their political leanings.

The real estate sector had started its recovery from the Intensive Care Unit (ICU), High Dependency Unit (HDU) and general ward during the Covid pandemic before the political campaigns struck.

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At the height of the pandemic, the sector recorded a reduction in labour force and disruptions of supply chains. There was also a slowdown in building approvals as public offices remained shut to combat the virus. Developers reduced construction activities to reserve their cash because of the declining consumer spending power in the market.

The upcoming polls have caused jitters leading to uncertainties that have left some prospective investors anxious. The high cost of construction materials attributed to the Russia/Ukraine war makes matters worse. It would therefore make sense to some investors to hold on to their money and wait for a more predictable economy.

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Some experts say that the upcoming polls mainly cause a threat to off-plan buyers with projects in the initial stages of construction compared to purchasing a complete house.

It may be wise to consider investing in either a complete or near-complete house in the run-up to the elections to benefit from the upside once the economy stabilises.

Political pundits concur that every election cycle comes with unforeseen circumstances, therefore, it’s more advisable to consider investing when prices in real estate are depressed.

It will also be a good move for the next Government to offer incentives that make investments into the sector easier. County governments should also guarantee improved security, waste treatment infrastructure, public health and education facilities, recreational parks, street lighting and tarmacking roads to offer better value.

It is not all gloom as some optimists argue that our economic cycles in 2013 and 2017 grew slightly better compared to historical dips in economies over the past years.

After the elections and the dust settles, the national government should also support the lucrative real estate sector by championing for a favourable policy environment and ensuring construction approvals are done on time.

Harold Ayodo is an Advocate of the High Court of Kenya