Real estate is the best investment option this year even though politics will play a major role in determining returns from other key sectors.
Cytonn Investments 2016 Outlook Report released in Nairobi on Monday says local and foreign investors will continue reaping handsome returns since growth of the middle class and continued urbanisation create a growing demand for both residential and commercial developments across the country.
Cytonns is a real estate investments company that currently manages a Sh4 billion asset portfolio and has ongoing projects worth Sh50 billion.
The Cytonn investments manager, Mr Maurice Oduor, expressed optimism that if Kenya keeps politics out of development and business matters, a 5.5 per cent to 6.5 per cent growth is achievable.
“It is only President Uhuru (Kenyatta) and Deputy President William Ruto, who are politicians, while the rest are purely civil servants whose task is to deliver services to fellow Kenyans,” he said.
Mr Oduor spoke at the Sarova Stanley, when the company launched its report, which notes that the government will spend more funds in bringing to fruition ongoing projects as proof to Kenyans that its mandate has been met.
The Cytonn report says that last year, investors in real estate reaped handsome returns that stood at 29 per cent, a 10-year Treasury Bond yield of 12.3 per cent, securities 10 per cent and the 91-day Treasury bills 9.6 per cent.
Cytonn’s chief investment officer, Ms Elizabeth Nkukuu, said the anti-graft war would be won if more Kenyans expose the corrupt and the government enforces the law where culprits are forced to quit ahead of prosecution and surcharge.
This, would make civil servants more cautious while handling public funds.
“In 2016, we recommend that investors take a cautious approach by putting 40 per cent of their income in the fixed income securities, 30 per cent in equity, 20 per cent in alternative investments and 10 per cent in offshore investments,” says the report.
It remained apprehensive on resurgence of the tourism sector, saying security would determine this year’s performance as a peaceful electioneering period could see enhanced hotel bookings.
“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,” the report notes.
While 2015 saw private companies raise Sh21.5 billion from the bond market, the current environment portends an uncertain future where companies will have a reserved approach in seeking capital from the market.
It expressed fears that interest rates could rise as the government seeks to raise funds from within, while donors and foreign investors are 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 says.