Land firms shift to payment by installments as credit market trendschange

Land firms shift to payment by installments as credit market trendschange

In recent months, real estate companies especially those selling affordable land have taken on new methods of selling property.  Instalment plans have now become one of the fastest methods of land buying and an attractive hook for new landowners.

A report by Property Realty Company (PRC ) shows that over 80 per cent of real estate firms do not have credit partnerships with financiers, leaving only 18 per cent who are mainly backed by banks and SACCOs.

“55 per cent of those we interviewed cited lack of financing as their biggest challenge in investing in property,” said PRC in a statement.

According to the General Manager, Abraham Murithi: “Land buyers, from the research we carried out consider access roads, electricity, beacons and water as the most important factors when buying property”.

“Kitengela and Kangundo Road are the most preferred locations due to accessibility and availability of social amenities,” added Muriithi.

In order to remain competitive, there was an increase in the proportion of firms offering instalment purchase by 13 per cent to 87 per cent, with 61 per cent allowing payments of up to three months. Cost (Amount and repayment flexibility), is an important criterion consumers use to select real estate providers

With instalment plans starting from as little as Ksh10,000 a month, real estate firms have had to up the ante in a tight interest rate regime that has forced banks to rethink their income, as interest income comes under pressure

Within the period under review the number of real estate companies that allow instalment payments have increased by 17 per cent to 87 per cent.

The number of real estate companies that have not partnered with financial providers has increased by 6 per cent to 18 per cent, perhaps pointing to new ways of finding financing, such as buying using instalments.

The report also shows that the Kenya Commercial Bank and Equity Bank are the leading banks to have partnered with real estate firms in the provision of financing for land purchase at a market share of 26 per cent each while Housing Finance comes fourth at 13 per cent.

Tags:

banks equity bank Kenya Commercial Bank saccos change credit market trends Land Firms land purchase payments by installment PRC report by Property Reality Company (PRC )

Want to send us a story? Submit on Wananchi Reporting on the Citizen Digital App or Send an email to wananchi@royalmedia.co.ke or Send an SMS to 25170 or WhatsApp on 0743570000

Leave a Comment

Comments

No comments yet.

latest stories