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Recent Topicals

Nairobi Metropolitan Area (NMA) Mixed-Use Developments (MUDs) Report 2019

Nov 10, 2019

Last year, we released the NMA Mixed-Use Developments (MUDs) Report 2018 that highlighted the performance of Mixed-Use Developments within the Nairobi Metropolitan Area in 2018. According to the report, MUDs performed better in 2018 recording average rental yields of 8.0%, 0.5% points higher than single-use themes average of 7.5%. Other than the retail sector, which recorded average rental yields of 8.5%, 1.0% lower than single-use retail, commercial office and residential themes within MUDs performed better with rental yields averaging at 8.2% and 5.6%, 0.3% and 0.6% points higher than single-use office and residential units which had market averages of 7.9% and 5.0%, respectively. This week, we update our report based on research conducted in eight nodes within the Nairobi Metropolitan Area, comparing Mixed-Use Developments’ performance against the market perfo...

Interest Rates Cap Is Kenya's Brexit – Popular But Unwise

Aug 21, 2016

This week’s focus note is about the ongoing debate on interest rate caps. The Kenyan public is lately very angry with Kenyan banks for a whole list of reasons - we have had recent bank failures but there isn’t a single ongoing prosecution, livelihoods and investment deposits lost or locked up in failed banks, investments lost in bank bonds such as Chase and Imperial Bank bonds, value of investments in bank shares have almost been halved, and yet banks continue to charge high interest rates on loans coupled with low interest rates paid on deposits. Trust for the Kenyan banking sector is at its most recent low. The anger has culminated in the Kenyan people delivering an interest rate cap bill that has broad base support and is now only awaiting presidential signing to become law. We compare the interest rate cap bill to Brexit – a very populist move, fueled by anger, but an equally unwise move that we may quickly regret.Our view is that interest rate caps would have a clear neg...

Technology & Investments

Oct 27, 2019

Technology has continued to be a disruption in the investment industry, both in Kenya and globally, thus, following our Fintech Impact on Kenya’s Financial Services Industry report on technology in financial services, in this week’s report we focus specifically on investments. One of the most tangible disruptions is the ability that technology provides to make investments easier to access, be it through a website or mobile phone. From the comfort of your phone, you can now access an investment company’s website or application, make an investment or withdraw an investment. This was not possible a few years ago where you had to visit a brick and mortar branch to create an investment account and manage your account. All these aspects of modern investing are relatively recent disruptive innovations being used by firms to remain competitive in a market where clients are no...

End of Interest Rate Caps?

Oct 20, 2019

This week, we revisit the interest rate cap topic following the recommendation by President Uhuru Kenyatta to repeal the Interest Rate Cap, in a memorandum to Parliament in which he declined to assent the Finance Bill, 2019 into law. This is the strongest directive thus far by the government on the repeal of the interest rate cap and could mark the abolishment of the current regulated loan-pricing framework. We, therefore, revisit the issue of the interest rate cap, focusing on: Background of the Interest Rate Cap Legislation - What Led to Its Enactment? A Recap on Our Analysis on the Subject A Review of the Effects It Has Had So Far in Kenya Recent Developments Next Steps, Options for the Legislature on the Finance Bill, 2019, and Our Views, Expectations, and Conclusion Section I:  Introduction

Focus of The Week: Cytonn’s Kenya Retail Real Estate Sector Report 2019

Oct 13, 2019

In October 2018, we released the Kenya Retail Sector Report - 2018, themed “Retail Sector Recovers in Key Cities Except Nairobi”, which focused on the performance of the retail real estate sector in Kenya in 2018. According to the report, the retail sector in Kenya recorded improved performance across all major cities in Kenya with the exception of Nairobi, which recorded a decline in rental yields by 0.2% points to 9.4% in 2018 from 9.6% in 2017. This week, we update those findings with our Kenya Retail Sector Report - 2019. The report is based on findings from research conducted in 8 nodes in the Nairobi Metropolitan Area, as well as key urban cities and regions in Kenya, including North Rift, Coastal Region, Western/Nyanza, and Mt. Kenya. The report highlights the performance of th...