As the Kenyan Shilling faces depreciation against major currencies, including the United States Dollar, a growing number of landlords in Nairobi, particularly in affluent areas like Westlands, Karen, Gigiri, Runda, Kileleshwa, and Muthaiga, are adopting a strategy to mitigate potential losses. They are now requesting rent payments in dollars to safeguard against the volatility of the Kenyan Shilling.
Shunguli Duncan, representing Rock Field Properties, revealed that there has been a substantial increase in the number of landlords opting for rent payments in dollars, especially those who are expatriates or foreign property owners. The preference for dollars is attributed to the instability observed in the Kenyan Shilling.
“Some of the owners are not local; they are expatriates. They prefer dollars because of the instability of the Kenyan Shilling,” explained Shunguli.
He further highlighted that many foreign property owners had secured loans in dollars to finance the construction of their houses. Consequently, they find it advantageous to receive rent payments in the same currency, providing a hedge against potential loan default.
This practice enables landlords to match their loan obligations, ensuring that the rental income in dollars aligns with the currency in which the loans were acquired. For instance, if a landlord pays USD1,000 monthly to service a loan, they can list the property for a similar amount in dollars, ensuring a stable repayment plan.
The adoption of rent payments in dollars is perceived as a prudent financial strategy to navigate the currency fluctuations and protect the interests of both landlords and tenants. However, this trend has sparked discussions about its long-term implications and the broader economic impact on local tenants and businesses.
