Real estate boom under new EA Market Free markets and investor protection will attract regional and global capital flows. Photo/FILE By FRANCIS AYIEKO THE EAST AFRICAN Posted Monday, July 12 2010 at 00:00 Risks associated with the real estate business in East Africa are expected to come down following the coming into force of the Common Market Protocol. According to Kenyas real estate players, the huge regional market provided will help firms diversify their activities, making it easier to manage risks . Under the Protocol, cross-border investment has been made easy as companies can freely open branches in other East African states, or even partner with those carrying out similar businesses. Already, a number of Kenyan firms are planning to open branches in Uganda, Tanzania and Rwanda. A few others that have been operating mainly in Uganda and Tanzania say the Common Market will make it easier and cheaper to operate in those countries. It is a very exciting time for professionals in the real estate sector in East Africa. From dealing with a market of 40 million people, we will now be dealing with one of 127 million people. That is huge. It will help us diversify and manage risks during difficult times, said Reginald Okumu, director of Ark Consultants, a Nairobi-based real estate firm. He cited some of the risks as low demand in a given market, poor economic performance, and political instability. When one market is not doing well, you can mitigate the losses by relying on the vibrant markets of other partner states, he said. Mr Okumu said the Common Market would make it easier for professionals to travel within partner states and work in any country they choose. This, he said, used to be difficult because of work permit requirements. Most of us used to hide under tourist and visitor visa, which sometimes never worked, said Mr Okumu, whose firm plans to open a branch in Kigali, Rwanda, soon. The Protocol came into force on July 1 and provides for free movement of people and labour. This means citizens of East Africa will move freely across the region and work in any member state without the need for a work permit. On June 30, 2010, Kenya became the second EAC country after Rwanda to waive the work permit requirement for citizens of other EAC partner states. A number of Kenyan companies among them KCB, Nakumatt Supermarket and Equity Bank have already set up shop across the borders. Those professionals who have been serving these companies will follow them across the borders to continue working for them, Mr Okumu said. Among the well-known Kenya-based real estate firms that have been operating in the other EAC member states are Knight Frank, Gimco and Regent Management. Regent Management chief executive Wilberforce Oundo says the Common Market will spur growth in the regions property industry as a result of cross-border investments. This growth, he says, is hinged on the fact that the banking industry will become borderless. Banks are the main clients of real estate professionals, who provide them with valuation services for mortgages and other forms of loans. Regent formally opened an office in Kampala, Uganda, in September 2009. This decision, says Mr Oundo, was informed by the anticipation of the huge market that was bound to open up under the Common Market. It was also because most of Regents targeted clients, mostly banks and property developers, had started operating across the region. Mr Oundo says the response to their entry into Uganda has been good. He says the Common Market will also allow for cross-border transfer of technical skills. Kenya, he says, will benefit hugely from Ugandas huge pool of unemployed real estate professionals. Uganda has a huge supply of real estate graduates, more than the country can absorb, he said. Market players say Kenya, the dominant economy in the region, has a shortage of professionals since the University of Nairobi is not producing enough Land Economics graduates. The Institute of Surveyors of Kenya, the industry lobby, is already organising workshops to sensitise its members who include valuers, estate managers and land surveyors on the opportunities that the Common Market presents. We want to train them on the opportunities available, said ISK chairman Collins Kowuor.