Hass Proprty Index Quarter - 3 - 2011

The H ass Property
INDEX
QUARTER THREE REPORT 2011
HassConsult Limited | ABC Place, Waiyaki Way | P.O. Box 14090 - 00800 Nairobi, Kenya T: +254 20 4446914 | F: +254 20 4447200 | M: 0722 204 765/0733 629 786 | E: info@hassconsult.co.ke
www.hassconsult.co.ke
The H ass Property
INDEX
Top-end rents drop on squeezed consumer spending

! Asking rents fall by 0.2 per cent, as standalone house rentals dropped 0.5 per cent and town house rents fell 1.9 per
cent
! Only smaller apartments saw any increase in rental prices ! Sales prices across all properties dropped by 1% ! Asking prices on houses fell at the top of the market, for standalone houses, but were stable for apartments and
townhouses
! Property maintained its lead over all other investment classes as an inflation beater
Index Highlights:
SALES AND LETTINGS COMPOSITE INDEX YEAR TO Q3
The Hass Composite Sales Index 320.0 310.0 300.0 290.0 280.0 270.0 260.0
2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3
The Hass Composite Lettings Index 250.0
240.0
230.0 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3
HEADLINES - HASS COMPOSITE SALES INDEX All Properties Stand Alone Houses Townhouses Apartments
% Change in Quarter -1.0 % -1.8 % +0.7% +0.6 %
% Change in Year +10.9 % +10.6% +11.3 % +11.7 %
*The Hass Composite Sales Index is a measure of asking sales prices and is now based on a mix adjusted method
HEADLINES - HASS COMPOSITE LETTINGS INDEX All Properties Stand Alone Houses Townhouses Apartments
% Change in Quarter -0.2 % -0.5 % -1.9 % +1.2 %
% Change in Year +3.9 % +5.0 % -3.5 % +6.8%
*The Hass Composite lettings Index is a measure of asking rental prices and is now based on a mix adjusted method
The H ass Property
INDEX
Rents revealed the clear impact of current economic pressures in the third quarter, even as house prices held stable, reported HassConsult when unveiling the Hass indices for July to September 2011. As inflationary and currency pressures continued to exert pressure on consumers' personal budgets, house prices stabilized, in a market where almost all the homes owned are already fully paid for, and require no monthly payments. The tiny segment of homes that have been bought with mortgages has left the local housing stock largely protected from the forced sales that follow from mortgage defaults in an economic downturn. The rental market, however, which is characterized by a relatively high ratio of rental spending as a proportion of income, is now revealing the clear impact of spending pressures. In the third quarter, asking rentals across all properties fell by 0.2 per cent compared with the previous quarter. This amounted to a sharp slowdown on the growth in asking rentals in this quarter, when rents rose by 3.9 per cent on the previous year, driven by a 5 per cent in rents for standalone houses, and a 6.8 per cent in rents for apartments. These were offset in the second quarter by a 3.5 per cent fall in the rents on town houses. The third quarter rental prices revealed a much more subdued rentals market. The asking rentals on town houses continued to fall, by a further 1.9 per cent in the quarter, pointing to the possibility of some oversupply in the availability of town houses for rent. The rentals on standalone houses also fell, by 0.5 per cent. Only apartment rentals saw further upwards pressure, up 1.2 per cent, but this rise was concentrated at the bottom end of the apartments market. The rentals on larger apartments fell over the period. But the rentals on smaller, cheaper apartments went up, as the one spot of rental rises in the middle and upper income property market. The shift in rental prices suggests we are seeing consumers who are moving down the accommodation ladder as their spending gets increasingly pressured - moving from larger to smaller rental properties and thus increasing demand at the bottom end of the market, said Ms Farhana Hassanali. However, closing sales prices on all houses stabilised in the third quarter of this year, increasing by 0.8 per cent, after falling by 2.0 per cent in quarter two. We see the ongoing stability in house prices as indicative of a market with few forced sales and some extension in new funding for house buyers. We further see that any risk of any future over-supply in new builds is now being offset by the current slowdown in construction, meaning that we maintain our prediction of house price stability into the medium term, said Ms Hassanali. The third quarter did, however, see an adjustment in the asking prices for houses, which fell by 1 per cent on the previous three months, after recording a 1.8 per cent increase in the previous quarter. Despite the slight dip, this still reflected a 10.9% increase over the year. The more subdued pricing was also concentrated at the very top of the market. The asking prices of standalone houses fell by 1.8 per cent, while the asking prices of town houses and apartments continued to rise, up by 0.7 per cent and 0.6 per cent respectively. HassConsult also issued comparisons of all broad investment categories shares, bonds, property and savings compared with inflation, which showed that since the year 2000, property has consistently outperformed all other investment categories, and earned returns consistently ahead of inflation.
The H ass Property
INDEX
Investment Performance
4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Sep 2011 Sep
Savings Equities Bonds Inflation Property Total Return on Property
Source: Basis: 1,000,000 KHSs, net income reinvested, data from31/12/2000 to 30/09/2011. Equities are represented by NSE (20) Share Index. Bonds are represented by Central Bank Interest rates (InterBank). Inflation is measured by the KNBS Consumer Prices (CPI). Property is represented by the Hass Property Index. Savings are represented by commercial bank's weighted average interest rates. Property Total Returns through income in the form of rent and secondly capital appreciation resulting from rising house prices. The Value of an investment can go up and down as a result of market movements. You may get back less than you invested. Past performance is not a reliable indicator of future performance. The purpose of the chart is to show volatility. Please note, you cannot invest directly in an index.
Inflation against Letting Performance

300.00 Inflation 250.00 Lettings (All)
200.00
150.00
100.00
50.00
0.00
2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec
The H ass Property
INDEX
The Hass Composite Sales Index All Property Types

400 350
SNAP SHOTS:
!
The Hass Composite Sales Index is representative of all property for sale in Kenya Property values have increased by 3.08 times since 2000 The index shows a property price fall of 1.0% in the last quarter and an 10.9% rise in the last year.
Index 2000 =100
300 250 200 150 100 50 0

!
2001 Q1 2001 Q3 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
SNAP SHOTS:
Annual Average All Property Types

35,000
The annual average is representative of the average price of all properties offered for sale in Kenya. The average value for a property has gone from 7.1 million in December 2000 to 22.13 million in September 2011. The average value for a 4-6 bedroom property is currently 29.65 million. The average value for a 1-3 bedroom property is currently 10.82 million.
ASking Price KSH.s 1000s
30,000 25,000 20,000 15,000 10,000 5,000 0
Mix by Year All Property Types

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
SNAP SHOTS:
!
The Mix by Year is a measure of the percentage that each type of property represents in the market. In 2001, apartments took up 23.5% of the market, Town Houses took up 24.5% of the market and Stand alone houses took up 52% of the market. In 2011* however, apartments took up 42.5% of the market, Town Houses took up 28.5% of the market and Stand alone houses took up 29% of the market.
!
Apartments (4-6 Bed)
!
Town Houses (4-6 Bed) Town Houses (1-3 Bed) Stand Alone Houses (4-6 Bed)
Stand Alone Houses (1-3 Bed)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
*Provisional results based on 9 months Data
The H ass Property
INDEX
The Hass Composite Sales Index Stand Alone Houses
400 350 300 250 200 150 100 50 0
Annual Average
Annual % Change
50% 40% 30% 20% 10% 0%
45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Stand Alone Houses
Stand Alone Houses
Index 2000 =100
-10% -20%
2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Stand Alone houses include houses, bungalows, cottages and villas either on their own plot or in a gated community. ! Property values for stand alone houses have increased by 3.57 times since 2001, a -1.8% fall in the last quarter and a 10.6% rise
in the last year. The average price for a stand alone house is currently 31.4 million up from 8.8 million in December 2000.
The Hass Composite Sales Index Town Houses
400 350 300 250 200 150 100 50 0
Annual Average Town Houses

25,000
50% 40% 30% 20% 10% 0%
Annual % Change Town Houses
20,000 15,000 10,000 5,000 0
Index 2000 =100
-10% -20% 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Town houses include townhouses and maisonettes that are semi-detached or terraced. ! Property values for town houses have increased by 2.75 times since 2001, a 0.7% rise in the last quarter and an11.3% rise in the
last year. The average price for a town house is currently 17.99 million up from 6.5 million in December 2000.
The Hass Composite Sales Index Apartments
400 350 300 250 200 150 100 50 0
Annual Average
18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Annual % Change
50% 40% 30% 20% 10% 0%
Apartments
Apartments
Index 2000 =100
-10% -20%
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Apartments include apartments, duplexes and triplexes. ! Property values for apartments have increased by 2.19 times since 2001, a 0.6% rise in the last quarter and an 11.7% rise in the last year. The average price for an apartment is currently 11.42 million up from 5.2 million in December 2000.
The H ass Property
INDEX
SNAP SHOTS:
The Hass Composite Lettings Index All Property Types

400 350 300 250 200 150 100 50 0
The Hass Composite Letting Index is representative of all property for rental in Kenya Rents have increased by 2.45 times since 2001 The index shows rents have fallen by -0.2% in the last quarter but have risen by 3.9% in the last year.
! !
Index 2000 =100
SNAP SHOTS:
Annual Average All Property Types

160 140 120 100 80 60 40 20 0
The annual average is representative of the average rent of all properties offered to let in Kenya. The average rental for a property has gone from Kshs. 38,516 in December 2000 to Kshs. 94,549 in September 2011. The average rent for a 4-6 bedroom property is currently Kshs. 140,000. The average rent for a 1-3 bedroom property is currently Kshs. 55,000.
1 to 3 Beds
4 to 6 Beds
Mix Adj
Mix by Year All Property Types

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
SNAP SHOTS:
!
The Mix by Year is a measure of the percentage that each type of property represents in the market. In 2001, apartments took up 45.3% of the market, Town Houses took up 20.5% of the market and Stand alone houses took up 34.1% of the market. In 2010, apartments took up 56.0% of the market, Town Houses took up 19.7% of the market and Stand alone houses took up 24.3% of the market.
!
!
Town Houses (4-6 Bed) Town Houses (1-3 Bed) Stand Alone Houses (4-6 Bed)
Stand Alone Houses (1-3 Bed)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
*Provisional results based on 9 months Data
The H ass Property
INDEX
The Hass Composite Lettings Index Stand Alone Houses
400 350 300 250 200 150 100 50 0
Annual Average Stand Alone Houses

200 ASking Price KSH.s 1000s 150 100 50 0 2001 Q1 2001 Q3 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
50% 40% 30% 20% 10% 0% -10% -20%
Annual % Change Stand Alone Houses
Index 2000 =100
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Stand Alone houses include houses, bungalows, cottages and villas either on their own plot or in a gated community. ! Rental values for stand alone houses have increased by 2.5 times since 2001, a -0.5% fall in the last quarter and an 5.0% rise in
the last year. The average rental for a stand alone house is currently Kshs. 143,732 up from Kshs. 56,959 in December 2000.
The Hass Composite Lettings Index Town Houses
400 350 300 250 200 150 100 50 0 2001 Q1 2001 Q3 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
Annual Average Town Houses

140 120 100 80 60 40 20 0
50% 40% 30% 20% 10% 0% -10% -20%
Index 2000 =100
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Town houses include townhouses and maisonettes that are semi-detached or terraced. ! Rental values for town houses have increased by 2.19 times since 2001, a -1.9% fall in the last quarter and an -3.5% fall in the
last year. The average rental for a town house is currently Kshs. 93,552 up from Kshs. 42,688 in December 2000.
The Hass Composite Lettings Index Apartments
400 350 300 250 200 150 100 50 0 2001 Q1 2001 Q3 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
Annual Average Apartments

120
50% 40% 30% 20% 10% 0%
100 80 60 40 20 0
Index 2000 =100
-10% -20% 2002 Q1 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3
1 to 3 Beds
4 to 6 Beds
Mix Adj
SNAP SHOTS:
! Apartments include apartments, duplexes and triplexes. ! Rental values for apartments have increased by 2.5 times since 2001, +1.2% rise in the last quarter and a +6.8% rise in the last year. The average rent for an apartment is currently Kshs. 58,258 up from Kshs. 21,638 in December 2000.
Annual % Change Town Houses
Annual % Change Apartments

Hass Proprty Index Quarter - 3 - 2011

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The H ass Property

QUARTER THREE REPORT 2011

The H ass Property

Top-end rents drop on squeezed consumer spending

The Hass Composite Lettings Index 250.0

230.0 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3

% Change in Quarter -1.0 % -1.8 % +0.7% +0.6 %

% Change in Year +10.9 % +10.6% +11.3 % +11.7 %

% Change in Quarter -0.2 % -0.5 % -1.9 % +1.2 %

% Change in Year +3.9 % +5.0 % -3.5 % +6.8%

The H ass Property

The H ass Property

Savings Equities Bonds Inflation Property Total Return on Property

Inflation against Letting Performance

The H ass Property

The Hass Composite Sales Index All Property Types

Index 2000 =100

300 250 200 150 100 50 0

Annual Average All Property Types

ASking Price KSH.s 1000s

30,000 25,000 20,000 15,000 10,000 5,000 0

Mix by Year All Property Types

Apartments (1-3 Bed)

Stand Alone Houses (1-3 Bed)

*Provisional results based on 9 months Data

The H ass Property

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Stand Alone Houses

Stand Alone Houses

Index 2000 =100

Annual Average Town Houses

Annual % Change Town Houses

ASking Price KSH.s 1000s

20,000 15,000 10,000 5,000 0

Index 2000 =100

Index 2000 =100

The H ass Property

The Hass Composite Lettings Index All Property Types

Index 2000 =100

Annual Average All Property Types

Mix by Year All Property Types

Apartments (1-3 Bed)

Stand Alone Houses (1-3 Bed)

The H ass Property

Annual Average Stand Alone Houses

Annual % Change Stand Alone Houses

Index 2000 =100

Annual Average Town Houses

Index 2000 =100

Annual Average Apartments

Index 2000 =100

Annual % Change Town Houses

Annual % Change Apartments

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