Get this: it’s now cheaper to buy a three-bedroom house in Houston than a comparable three-bedroom house in one of Nairobi’s better suburbs. Rich Kenyans know this, and they are now entering the U.S. market as significant players.
Joseph Wang’endo of Nairobi’s Realty Capital Agency says more and more of his time is spent brokering homes in the U.S. to Kenyan investors.
He says that most buyers are not usually individuals who want to live in the U.S., but rather Kenyan investors or limited liability companies who then become the landlords for a rental property that he says can generate nearly $3,000/month in income.
Kenya did not have a housing bubble. Its growth slipped at the worst part of the world recession, but it never went into a recession. Today, growth in Kenya is zooming up higher than ever.
This is not unlike most of the emerging nations of the world.
I won’t pretend to be an economist, and I’ll let you reference that body of work (in the same way you try to find a quote in Shakespeare), but here’s my basic understanding.
1) The emerging economies are much more plastic (possibly, dynamic) than the larger economies. They can change quickly. The tea industry might be the biggest supplier to the GDP one year, and then cell phone manufacturing the next. It takes less time to create infrastructure for any given industry, and the work force supplies new industries faster and better.
2) Governments like Kenya are more socialist. They worry more about growth and citizen well being than national debt. Total Kenyan national debt is around three-quarters or higher of the GDP. Public debt is routinely at 50% or higher and the additional external debt is another quarter or more of GDP. [In the U.S. we make no distinction between locally held “public debt” and foreign-held “external debt” as done in the developing world. This is because developing world currencies are not convertible into developed world currencies like the dollar or Yen or Euro.]
The current American debt is a little bit more than half our GDP.
3) America goes into its highest debt during a recession, to stave things from getting worse. Emerging nations like Kenya reach their highest debt usually during boom times, when the government is trying to send the rocket economy even higher.
This story is not news to the Americans who need to know.
Today’s major newspaper in Nairobi, the Daily Nation, published this story about Kenyans buying into the American real estate market this morning (Kenyan time, 6 hours ahead of New York).
By 8 a.m. (EDT), the second comment left after the online story was from “a licensed real estate broker/investor in Charlotte NC” inviting readers to contact him by email.
I’m not suggesting that the American economy, which is 225 times bigger than Kenya, should pursue the same economic policies. But ….