Real estate is the best 2016 investment vehicle with politics expected to play a major role in determining returns in other key sectors.
Cytonn Investments 2016 Outlook Report stated that local and foreign investors’ funds were best placed in real estate, which recorded a 29 per cent growth last year.
The report noted that devolution has created a further need for residential and office space in county capitals where job and investment opportunities are growing at a fast rate.
Cytonn Investment Manager Mr Maurice Oduor expressed optimism that a 5.5 per cent to 6.5 per cent growth can be achieved this year if Kenya keeps politics out of development and business matters, .
Mr Oduor spoke at the Sarova Stanley Hotel on Monday when the company launched the report.
The report stated that in 2015, investors in real estate reaped handsome returns that stood at 29 per cent, 10-year Treasury Bond Yield was 12.3 per cent, securities 10 per cent and the 91-day Treasury bills 9.6 per cent.
Cytonn Chief Investment officer Ms Elizabeth Nkukuu said outspokenness among Kenyans in the anti-corruption war was the best remedy to fight the vice.
She said civil servants are more cautious while handling public funds and this will lead to enhanced service delivery.
“In 2016, we recommend that investors take a cautious approach by investing 40 per cent of their income on the fixed income securities, 30 per cent in equity, 20 per cent on alternative investments and 10 per cent on offshore investments, said the report.
The report stated local and foreign tourism stood to enjoy an upward swing if visitors were guaranteed security to venture out for leisure and business travel across Kenya.
“County governments are running aggressive campaigns to showcase their regions as business and tourism hubs to the world. This is unlocking new avenues for tourism growth in the country” it noted.
While 2015 witnessed private companies raise Sh21.5 billion from the bond market, the prevailing 2016 environment portends an uncertain future where companies will have a reserved approach in seeking capital from the market.
The report expressed fears that interest rates could rise if the government seeks to raise funds from within as donors and foreign investors were apprehensive on the soon to kick off campaigns ahead of the 2017 elections.
“Realisation of cheaper and reliable power upon commissioning of the 280MW of wind power, improved security and new industries will nurture new growth opportunities and enhanced revenues in 2016,”it said.
On the housing sector, provision of cheaper mortgage facilities for civil servants is also expected to spur tremendous growth in the housing sector countrywide.
The report observed that 2015 saw a cumulative Sh114 billion diaspora inflow and 2016 could enjoy higher amounts as more Kenyans living abroad sink more funds in real estate development.