Kenya Markets

Select Assets Produce Cash, but Prices and Liquidity Still Need Proof

Kenya Markets · Real Assets & Alternatives — Quarterly Report · Publication 7 August 2026 · Review Q2 2026

Published 7 August 202616 min readSerrari Compliance & Strategy

Kenya's strongest evidence is in used logistics infrastructure, select prime offices, student housing and completed private-capital deals; broad property-price proof, REIT trading liquidity and cash returns from private exits remain weak.

Executive summary

Kenya's real-asset market is producing credible income in selected places, but the evidence does not support a broad property or alternatives boom. Prime Nairobi offices ended 2025 with 81.58% occupancy and stable headline rents, while modern logistics space in established industrial nodes continued to attract users. Mombasa handled 45.45 million tonnes of cargo in 2025, proving that an important operating asset is being used more.

Residential values are split. The official first-quarter index rose 4.8% from a year earlier, but standalone houses gained while apartments fell. More importantly, the index is built mainly from advertised or asking prices. It improves market visibility but does not prove what buyers paid at completion. Completed-sale evidence remains too limited for a confident national valuation claim.

REIT income is also selective. ILAM Fahari's higher distribution was covered by distributable earnings and supported by Greenspan Mall, yet another property had very low occupancy. Acorn's student-housing REIT reported stronger profit and distributions, but current-year operating cash flow fell sharply. All three Kenyan REITs trade on the Unquoted Securities Platform, where a quoted price does not guarantee a quick sale.

Capital is moving. Pension portfolios increased reported private-equity and REIT balances, and Kenya received US$1.04 billion of technology funding in 2025. That funding was concentrated in a few large deals and almost half was debt. Private-market exits occurred, but public evidence still does not show how much cash Kenyan investors received relative to the money committed.

What this means to investors

Income and price appreciation must be separated. A property can rise in advertised value with flat rent, or produce reliable rent with an uncertain resale value. Strong cases combine collected cash, manageable costs and an asset already in use. Asking prices and planned capacity do not meet that test.

Gross yield is rent divided by purchase price. Net yield deducts vacancy, management, maintenance, unrecovered service charges, rates, insurance and repairs. Financing comes last. With Kenyan borrowing costs often in the mid-teens, an acceptable unleveraged yield can become negative after interest.

Direct property can take months to sell, and the completed price may differ from the advert. REITs offer smaller units and visible prices, but platform trading is thin. A discount to net asset value means the market price is below the estimated property value; it does not prove that a large order can trade at that price.

REIT distributions should be compared with rent-generated cash because fair-value gains can lift profit without creating cash. Infrastructure contract value should be separated from disbursement, completed work and use. A private fund close is committed capital, a completed investment is deployed capital, and an exit matters when sale proceeds return cash.

A structured product should state its underlying asset, payoff, fees, maturity, worst-case loss, issuer risk and exit mechanism in plain language. Legal permission does not create active trading. A digital token needs a separate ownership test covering title, custody, transfer rights, encumbrances and insolvency. The token alone is not title.

Illustrative property yield: gross is not net

Illustration only, not a market quote. KSh20.0 million property with KSh1.6 million annual headline rent.

Step	Annual amount	Return on purchase price	What it means
Headline rent	KSh1.60m	8.0% gross	Assumes every month is collected
Less one month vacancy	(KSh0.13m)	—	Occupied days and collected rent can differ
Less management	(KSh0.12m)	—	8% of rent collected
Less maintenance and unrecovered service	(KSh0.20m)	—	Recurring asset costs
Less rates, insurance and repairs	(KSh0.12m)	—	Costs before tax and financing
Net property income	KSh1.03m	5.1% net	Income available before debt and tax
Interest on 50% debt at 12%	(KSh1.20m)	Negative cash after interest	Leverage absorbs the property income

WHAT THIS TELLS US An 8.0% headline yield can become 5.1% before financing and negative after interest. The exact costs vary by asset, but the order of the calculation should not.

Market at a glance

Direction is based on the latest public evidence, not a forecast. Liquidity means the practical ability to sell without a large delay or price concession.

Asset	Income direction	Value direction	Liquidity	Capital movement	Simple assessment
Residential property	Rents improving selectively	Houses up; apartments down	Low	Selective development; approvals fell	Income matters more than the headline index
Office property	Prime income firmer	Broad values uncertain	Low	Tenants moving to better buildings	Quality is winning; no market-wide shortage
Retail property	Mixed	Mostly stable or unclear	Low	Neighbourhood centres and new pipeline	Convenience formats stronger; supply risk remains
Industrial and logistics	Improving in main hubs	Positive for modern stock	Low	Factories, warehouses and data centres	Best property demand evidence, but location-specific
REITs	Mixed to improving	Asset-specific	Thin and episodic	Pension allocation rose; one raise missed target	Cash yield exists; exit liquidity is weak
Infrastructure	User income and throughput rising selectively	Not regularly traded	Very low	Large contracts active; many projects early	Operating ports strongest; announcements need filtering
Private equity and venture	Portfolio income mostly private	Valuations opaque	Very low	Completed deals increased	Deployment is real but concentrated; cash exits unclear

Sources: KNBS residential index; Knight Frank Kenya; ILAM Fahari; Acorn ASA I-REIT; Kenya Ports Authority; AVCA.

WHAT THIS TELLS US Industrial and logistics property has the clearest demand case. Residential and office markets are split by type and quality. REITs improve access to income assets, but their trading platform is not yet a deep secondary market.

Residential prices split, while transaction proof remained incomplete

The KNBS Residential Property Price Index rose 4.8% from a year earlier in the first quarter of 2026 and 0.6% from the previous quarter. Standalone houses gained 8.5% yearly, while apartments fell 3.0%. The split is consistent with better demand for scarce, well-located family houses and continued price pressure in apartment-heavy submarkets.

The index should not be read as a completed-sales register. KNBS documents that its main inputs are online property listings and asked prices, supported by validation work. Kenya's fragmented, paper-based transaction records have not yet produced a complete national closing-price series. The index is broader and more systematic than a single agent survey, but it still measures seller expectations more directly than buyer payments.

Figure 1. Official residential price direction by property type.

Chart of official residential price direction by property type

WHAT THIS TELLS US Property prices did not move together. The strongest official signal is for standalone houses, while apartments weakened. Neither movement is proof of a completed transaction price.

Sources: KNBS Q1 2026 RPPI; KNBS methodology; KNBS data-source presentation; HassConsult index.

Rents and occupancy improved only in selected property segments

Prime Nairobi office occupancy rose from 77.71% in June to 81.58% in December 2025, while prime rents held near US$1.20 per square foot a month. That is an improvement, not a shortage signal: close to one-fifth of prime space was still unoccupied, tenants retained negotiating power and older or less efficient buildings faced greater pressure. The market is better described as a flight to quality than a broad office recovery.

Retail performance was mixed. More than 230,000 square feet of new space opened in 2025, mostly in neighbourhood and community centres. Smaller convenience-led schemes and strong anchor tenants performed better, while constrained household spending limited broad rent growth. The 2026 pipeline adds supply, so occupancy alone should be checked against rent concessions, arrears and service-charge collection.

Industrial and logistics property has the clearest shortage of modern, serviced space in Tatu City, Mombasa Road and Athi River. Operating factories, distribution centres and special-economic-zone users provide real demand. That does not mean every warehouse location is undersupplied. Electricity quality, road access, floor loading, ceiling height and tenant credit determine whether a building competes as modern stock.

Residential demand is also segmented. Student housing and lower-cost rental units near jobs and transport can be undersupplied, while some investor apartments face weak price growth and competing stock. A falling approval pipeline may tighten future supply, but it cannot establish today's rent collection. Bank statements, ageing schedules for tenant arrears and renewal rates are stronger evidence than occupancy alone.

Sources: Knight Frank Kenya market update; KNBS residential index.

REIT distributions improved, but cash quality and trading remained uneven

ILAM Fahari I-REIT declared KSh0.65 a unit for 2025, up from KSh0.30. Distributable earnings were KSh0.81 a unit, implying an 81% payout and accounting coverage. Greenspan Mall supplied most of the operating strength: rental income rose 14.6% and occupancy reached 93%. The concentration risk was equally visible. Occupancy at 67 Gitanga fell to 14% after a major tenant left, and that property's rental income dropped sharply.

Acorn's student-housing I-REIT declared KSh0.86 a unit for the full year and reported KSh670.2 million of profit. However, operating cash flow fell to KSh98.4 million. That cash flow was well below the cash required for the reported full-year distribution, even though cash balances and earlier-period resources may have supported payment. Investors should follow rent collected, finance costs and cash reserves, not profit alone.

Liquidity remains the common weakness. The REITs trade on the NSE's Unquoted Securities Platform, which gives a price and a transfer mechanism but not continuous, deep trading. Reported cumulative volumes show that transactions occur, yet ILAM's total volume through early July was only about 1.2 million units. A displayed price is not proof that a large order can be executed quickly without moving that price.

Sources: ILAM Fahari 2025 annual report; Acorn ASA I-REIT 2025 annual report; NSE REIT information; USP trading summary.

Infrastructure evidence became stronger where users can be counted

Mombasa Port handled 45.45 million tonnes of cargo in 2025, 10.9% more than in 2024. Container traffic rose 5.5% to 2.11 million TEUs and transit cargo rose 19.5%. Cargo increased another 4.1% in the first five months of 2026. This is evidence of actual use. The traffic growth also raises congestion risk and the need for timely expansion.

Figure 2. Growth in actual use of Mombasa Port.

Chart of growth in actual use of Mombasa Port

WHAT THIS TELLS US Port investment has a visible demand base. The same evidence standard should be applied to roads, rail, power and data centres: operating traffic or contracted users matter more than capacity announced.

Sources: Kenya Ports Authority performance; KPA project targets.

Infrastructure: announced is not operating

Stage	Current Kenyan example	Evidence available	What must not be claimed
Operating and used	Mombasa Port	Cargo, container and transit volumes	High traffic does not prove unconstrained capacity
Under construction	KPA Berths 19B and Dongo Kundu Berth 1; KeNHA road programme	Signed contracts, work targets and 74.4km of roads completed in FY2024/25	KSh214bn contract value is not the amount already spent
Financed or early works	Tatu City data-centre expansions	Ground-breaking and financing announcements	Facility size is not drawn cash or operating capacity
Feasibility or transaction advice	Nairobi-Mombasa A8 PPP	Detailed feasibility and advisory stage in April 2026	The proposed project value is not committed or deployed capital

Sources: KeNHA 2024/25 annual report; PPP project status, April 2026; Knight Frank industrial and data-centre update.

KeNHA reported 2,398 kilometres of roads under construction at a KSh214 billion contract sum, but only 74.4 kilometres of new roads were completed during the financial year. Pending bills of KSh73.5 billion show execution and financing pressure. Project assessment should therefore move in order from announcement, to signed finance, to disbursement, to construction, to operation and finally to measured use.

Private capital deployment rose, but returns and legal rights still need testing

Kenya remained East Africa's main destination for private capital. AVCA reported that Kenya accounted for 61% of the region's deal volume and 87% of value in 2025. Partech recorded US$1.04 billion of Kenyan technology funding across 91 deals, up 72% in value. These are completed financing events, not merely fund-raising targets.

The headline is concentrated. Four transactions larger than US$100 million supplied about US$610 million, close to 60% of Kenya's total technology funding, and debt represented 48%. More money was deployed, but not evenly across early-stage companies. Debt can extend runway without immediate dilution, yet it increases repayment and refinancing risk if revenue does not arrive on schedule.

East African exits improved and AVCA reported faster exit growth, with nearly 40% of 2024-25 exits occurring within four years of investment. The missing figure is cash returned to limited partners. Public reports usually count exit events, not purchase cost, sale proceeds, fees and distributions to investors. The evidence supports more exit activity, but not a market-wide achieved return.

Agricultural assets do not yet have a comparable public income series. Crop output and prices can be measured, but direct farm net income depends on weather, irrigation, inputs, labour, storage, off-take contracts and biological cycles. Listed agricultural companies provide audited company cash flows, not a general farmland yield. Stable income should be claimed only where multi-year collections, water rights, insurance, tenant or operator quality and maintenance capital are disclosed.

Kenya's 2025 virtual-asset law and July 2026 regulations set a stronger framework for real-world-asset tokens. The rules require evidence that the asset can be tokenised, ownership can be established, an independent valuation exists and custody or title arrangements are disclosed. They improve the questions investors can ask; they do not turn every token into enforceable ownership or guarantee an active resale market.

Sources: AVCA East Africa; Partech Africa technology funding; KNBS Economic Survey; Virtual Asset Service Providers Act; 2026 virtual-asset regulations.

Why did it happen?

First, users concentrated on quality and access. Tenants chose offices with better efficiency, logistics users preferred serviced industrial nodes and shoppers favoured convenient neighbourhood formats. The result is strong occupancy in selected buildings alongside surplus space elsewhere.

Second, financing remained expensive. High mortgage and development costs limited leveraged returns and slowed new approvals. Lower policy rates can help over time, but repricing is delayed because many loans are variable and lenders price credit risk above the policy rate.

Third, institutional portfolios sought diversification. Pension assets grew strongly, giving schemes more room to add private equity and REIT exposure. The balance-sheet data show where reported holdings moved, although they do not separate new cash purchases from valuation changes.

Fourth, infrastructure bottlenecks attracted capital. High port utilisation, road congestion, unreliable power and demand for digital capacity create a real need. The opportunity is credible only when funding, procurement and construction progress can be traced.

Fifth, regulation moved ahead of market depth. Rules for REITs, virtual assets and capital-market products are becoming clearer. Product legality and disclosure are necessary; frequent trading, reliable custody and enforceable investor rights still have to develop.

Who benefits and who faces pressure?

Group or asset	Likely position	Reason	Main pressure
Prime office and modern logistics landlords	Benefit	Better occupancy and tenant demand	Concessions, fit-out costs and tenant concentration
Apartment investors in supplied submarkets	Pressure	Advertised apartment values fell	Vacancy, service charges and slow resale
Neighbourhood retail centres	Selective benefit	Convenience and anchor tenants support visits	Weak household spending and new pipeline
Income REIT holders	Mixed benefit	Distributions improved in 2025	Cash coverage and thin trading
Port and logistics users	Benefit with congestion risk	More cargo and transit traffic	Capacity pressure and project delays
Private-market managers and borrowers	Benefit	More completed funding	Debt burden, opaque valuations and exit timing
Token and structured-product buyers	Conditional	Rules and disclosure are improving	Issuer risk, custody, legal ownership and no active exit
Agricultural operators	Mixed	Food demand supports use	Weather, input prices and unstable cash cycles

WHAT THIS TELLS US The best-positioned assets have contracted users and operating evidence. The most exposed investments rely on a future resale, a single tenant, expensive debt or a legal claim that has not been tested.

Where is money moving?

Kenyan pension assets reached KSh2.81 trillion in December 2025. Reported private-equity holdings rose from KSh16.2 billion to KSh29.9 billion over the year, while REIT holdings rose from KSh11.7 billion to KSh14.4 billion. Direct immovable property fell from KSh249.2 billion to KSh241.0 billion. This is a visible rotation toward pooled and private structures, not proof that every increase was new cash: year-end balances also include valuation changes.

Figure 3. Change in reported Kenyan pension allocations, December 2024 to December 2025.

Chart of change in reported Kenyan pension allocations, December 2024 to December 2025

WHAT THIS TELLS US Institutional capital is adding private equity and REIT exposure while reducing direct-property balances. The exact cash bought or sold cannot be separated from revaluation in the published totals.

Private capital also moved into Kenyan technology, climate and infrastructure-linked businesses through completed equity and debt deals. The concentration in four large financings means the flow should not be described as a broad start-up recovery. Fund announcements without named investments are commitments, not deployment.

REIT capital formation was more difficult. Acorn's 2025 income-REIT raise attracted about KSh655 million against a KSh3.85 billion target. The cash supported balance-sheet actions, including facility repayment, but the shortfall shows that institutional interest does not automatically produce full subscriptions or secondary-market liquidity.

Infrastructure capital is moving into signed road and port contracts and into early data-centre construction. Contract sums and financing facilities define possible scale. They should be reconciled with certified work, disbursements and operating revenue before being counted as actual capital deployed.

Sources: Retirement Benefits Authority; Pension allocation comparison; AVCA; Partech; Acorn annual report; KeNHA.

What could change this view?

Base case. Prime offices, modern logistics, student housing and operating transport assets continue to produce the best income evidence. Residential values remain split, REIT trading stays thin and private-market returns remain difficult to verify.

Positive change. Lower financing costs lift net cash flow; KNBS gains access to completed-sale records; REIT operating cash covers distributions; port and road projects reach operating milestones; and private exits disclose sale proceeds and investor distributions.

Negative change. New office, retail or apartment supply opens faster than collected rent; high leverage absorbs operating income; infrastructure bills delay construction; or a large private borrower fails to refinance.

Property evidence test. The view becomes stronger if completed transaction prices rise alongside collected rent and stable arrears. It weakens if advertised prices rise while actual sales, rent collections or renewal rates fall.

Liquidity test. The REIT view improves if weekly two-way trading becomes regular and larger orders clear near quoted prices. It weakens if distributions rise but investors cannot exit without a material discount.

Ownership test. A tokenised asset becomes credible only when title, custody, beneficial rights, valuation, encumbrances, transfer restrictions and insolvency treatment are independently verifiable. Licensing alone is not enough.

What to watch next

Known reporting windows and public events at the cut-off. Exact publication dates may change.

Window	Event or release	What to test	Asset affected
11 Aug 2026	Central Bank of Kenya policy meeting	Direction of financing costs and inflation risk	Leveraged property, REITs and projects
Aug-Sep 2026	REIT half-year reporting and USP trading data	Rent collected, operating cash, distributions and turnover	ILAM Fahari and Acorn REITs
Q3 2026	KNBS second-quarter residential index	House-apartment split and any stronger transaction inputs	Residential property
Q3-Q4 2026	PPP and agency project updates	Finance close, certified construction and operating milestones	Roads, ports and data centres
By end-2026	NSE target for an AI-focused ETF	Final structure, fees, custody, liquidity and actual launch	Structured products

Sources: CBK meeting notice; NSE information; KNBS RPPI; PPP status; NSE ETF plan.

WHAT THIS TELLS US The next quarter should be judged on cash and execution: rent collected, trades completed, construction certified, users counted and exit proceeds distributed.

Final Desk takeaway

Kenya has real income assets, but they are not interchangeable. Modern logistics buildings, selected prime offices, student housing and Mombasa Port have the clearest evidence of paying users. Residential prices are split and the national index still relies on asking prices. REIT distributions exist, yet cash coverage varies and the ability to trade remains limited. Infrastructure opportunity is large, but only operating use and certified construction turn project value into economic capacity. Private equity and venture funding has been deployed, although it is concentrated and public exit proceeds are incomplete. Agricultural, structured and tokenised assets require the strictest due diligence because income, liquidity or legal ownership can be difficult to verify. The investor advantage is therefore disciplined evidence: collected cash, completed transactions, usable assets, enforceable rights and a realistic path to exit.