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Recent Topicals

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Nairobi Metropolitan Area Commercial Office Report 2021

Apr 25, 2021

In 2020, we released the Nairobi Metropolitan Area Commercial Office Report 2020, which highlighted the state of the commercial office market in terms of supply, demand, performance, and investment opportunities within the sector and the overall performance of the sector in 2019. According to the report, the commercial office sector performance softened in 2019 recording a decline of 0.6% in average rental yields to 7.7% in 2019 from 8.3% in 2018. Occupancy rates declined by 3.3% to 80.5% in 2019, from 83.8%, in 2018. Asking rents declined by 4.3% to an average of Kshs 97 per SQFT from Kshs 101 per SQFT in 2018.  The main reasons that led to the declines in performance in 2019 were; i)an introduction of 1.5 mn SQFT office space to the market resulting to an oversupply of 6.3 mn SQFT which has created a bargaining chip for potential tenants...

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Sub-Saharan Africa (SSA) Eurobonds: Q1’2021 Performance

Apr 21, 2021

Background According to the International Monetary Fund’s (IMF) Regional Economic Outlook Update April 2021, the Sub-Saharan region economy is projected to have contracted at a rate of (1.9%) in 2020, but is expected to rebound in 2021 by registering a 3.4% growth, which is 2.6% points below the global projected growth of 6.0%. IMF anticipates the region to continue feeling the effects of the recent second wave of the pandemic, which seems to be stronger than the first one. The IMF further expects regional recovery to tag along pandemic-related risks such as; access to extrenal financing by governemnts and other persistant factors like political instability and domestic security. However, the effectiveness of vaccine distribution and inculation will boost the regional near term growth prospects.  

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Kenya Listed Banks FY’2020 Report

Apr 18, 2021

Following the release of the FY’2020 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that shaped the performance of the sector. Core Earnings per Share recorded a weighted decline of 26.8% in FY’2020, compared to a weighted growth of 8.9% recorded in FY’2019. The decline in the earnings was mainly attributable to the increased provisioning levels, which increased by 233.2% to Kshs 110.7 bn in FY’2020 from Kshs 33.2 bn in FY’2019, for the listed banking sector. Asset quality for the listed banks deteriorated, with the NPL ratio rising by 3.0% points to 13.5% in FY’2020 from 10.5% in FY’2019, and higher than the 5-year average of 9.9%. By the end of December 2020, the banking sector had restructured loans amounting to Kshs 1.6 tn (54.2% of the total banking sectors loans book) in order to offer relie...

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Commercial Office Sector Q1’2021 Markets Review Note

Apr 16, 2021

Gigiri and Karen were the best performing submarkets in Q1’2021 recording rental yields of 8.3% and 8.0%, respectively compared to a market average of 6.8%     I. Commercial Office Sector In Q1’2020, the commercial office sector recorded subdued performance attributed to; i) reduced demand of office spaces as businesses restructure their operations hence scaling down, ii)oversupply in the commercial office sector which has created a bargaining chip for tenders forcing developers to reduce their prices and give discounts and concessions to attract and retain clients, iii) tough economic environment which has resulted to firms scaling down, iv) declines in occupancy spaces as businesses continue to embrace the working from home strategy. Source: Cytonn Research...

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Residential Sector Q1’2021 Markets Review Note:

Apr 13, 2021

For detached units, top 3 markets were Rosslyn, Ruiru and Kitisuru, and for apartments, the top 3 markets were Westlands, South C, and Ruaka. During Q1’2021, the residential sector recorded increased activities supported by; i) increased transactional volumes following improved liquidity with gradual reopening of the economy, ii) improved access to mortgage loans thus encouraging uptake of units, and, iii) continued focus on the affordable housing agenda aimed at delivering affordable homes for Kenyans. In terms of performance, the sector recorded improvement, with y/y average total returns to investors coming in at 5.1%, up from 4.7% recorded in FY’2020. Prices in all segments saw an uptick with an overall y/y average price appreciation of 0.5% in the residential market while the y/y average rental yield recorded a 0.2% points decline to 4.7% from 4.9% recorded in FY’2020 attributed to reduced rental rates in the wake of a tough op...

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