6 Reasons Why Real Estate Investors Are Going for Second Tier Cities Kamulu Kenya
Real estate investors have recently identified great investment opportunities outside the big cities. This has led to a significant shift to second-tier cities in Kenya. For instance, most people in Nairobi are leaving the city to invest in second-tier cities, thanks to the unexplored opportunities.
Are you wondering what second-tier cities are? These are developing cities in terms of real estate. They are upcoming, and many investors prefer them basically because they are not expensive.
In this article, we will find out why you should consider second-tier cities if you are an investor. Keep reading.
1. Low Entry Cost
Low entry cost is why investors are moving to second-tier cities. This is because land and properties there are cheap compared to Tier-1 cities. It is, therefore, easier for you to buy properties in these areas and make an excellent rental income. Subsequently, the rental yield here is higher, making real estate investment an attractive option for anyone looking for a regular source of income from real estate.
2. They are many
Kenya is a developing country with several upcoming cities. These cities boast a big population of not less than 500,000 people. Most of these populations are facing urbanization, joblessness, and poverty. These issues present great investment opportunities. For instance, one can buy land and set up commercial buildings that the residents can use for businesses. Also, you can set up institutions like schools or hospitals and create job opportunities while making money.
3. Second-Tier Cities are Governance and economic centers
Second-tier cities play a significant role in the growth of the national economy. They come in handy for the secondary growth level of the government. Most manufacturing investors move to these cities to set up factories, resources, and industrial centers. They are also significant satellite cities that later form a cluster of cities in metropolitan regions.
All these development opportunities work to the advantage of real estate investors. For instance, you can put up go-downs and hire them for the factories and industries in these cities.
4. Fast Growth
At least 40% of the Kenyan population live in urban settlements with more than 500,000 people. However, as most people move there, these numbers will increase in the secondary cities in the next 10 or 15 years. This will translate to more real estate investment opportunities, economic growth, and demand for extensive infrastructure.
5. Risk Diversification
You have a greater chance of risk diversification in second-tier cities than in already-developed cities. If you are a capable real estate investor and can own properties in multiple second-tier cities, the investment risk will be lower for you. You won’t have to worry about unforeseen circumstances like economic shakeups or natural disasters that sometimes strongly hit developed cities. With this diversification, you enjoy a stable and varied real estate investment portfolio that boasts less susceptibility to market fluctuations.
6. High Rental Yield and Capital Appreciation
Any investment made in Tier -2 cities has a higher chance of growth thanks to their lower average prices. These cities also feature a steady growth rate and many open spaces around them. As a result, if you set up housing projects here, you will likely enjoy higher rental profits and capital appreciation.
If you invest in commercial properties for sale in Nairobi Kenya in a second-tier city, your rental yields can be as high as 15% and at least 7% for residential properties. The best part about these cities is that they boast a steady rise and therefore your investment is guaranteed to be profitable for a long time.
Second-Tier cities are increasingly in high demand, with most real estate agents targeting them. Both commercial and residential properties are in high demand in these cities, so you won’t be making a wrong investment decision by going for them. The risk factor is low here; you don’t need to break the bank to start your investment dreams.
The growth rate is also guaranteed since most factories and industries are moving from first-tier to second-tier cities. Additionally, second-tier cities have healthy economic numbers and accessible entry points.
Consider the second-tier cities if you want to start well in real estate with less dramatic downside swings.