- Property prices in Nairobi and land costs in satellite towns around the capital have risen to new highs on renewed demand from buyers.
- Land prices in Nairobi rose a marginal 1.07 percent and jumped 7.35 percent in satellite towns such as Kitengela and Juja.
- The rise in land costs in satellite towns was the fastest in five years, a reminder of the days when the housing frenzy led to coffee plantations in Nairobi’s suburbs being uprooted to make way for gated communities and shopping malls.
Nairobi property prices and land costs in satellite towns around the capital have risen to new highs on renewed demand from buyers who had been slowing acquisitions at the height of the Covid-19 economic difficulties.
Data from broker HassConsult shows that the price of an average home in the city rose 6.8 percent in the year to March, compared with a 1.8 percent drop in the same period last year.
This is the fastest increase since 2018, when growth was 8.5 percent, reflecting the real estate market’s recovery from the impact of the Covid-19 pandemic.
Land prices in Nairobi rose a marginal 1.07 percent and in satellite cities like Kitengela and Juja posted a 7.35 percent increase, compared with growth of 0.58 percent in the year to March last year.
The rise in land costs in satellite towns was the fastest in five years, a reminder of the days when the housing frenzy led to coffee plantations in Nairobi’s suburbs being uprooted to make way for gated communities and shopping malls.
Real estate was among the sectors hardest hit by the economic fallout from the pandemic as orders from new homebuyers dried up, largely due to lost income and jobs, cautious lending by banks and investors opting to keep their cash in hand while driving to keep out of economic uncertainty.
The sector was one of the fastest growing in Kenya in the decade to 2015, with returns outperforming equities and government bonds.
“During the quarter, the cities of Thika, Juja and Ruiru sustained investor demand, reflected in land prices rising 6.3 percent, 4.6 percent and 1.6 percent, respectively,” said Sakina Hassanali, head of development consulting and research at HassConsult.
This was due to the rebound in Kenya’s economy over the past year, which grew at the fastest pace in 11 years following the easing of Covid-19 restrictions.
Growth fueled recovery in key sectors, with the exception of agriculture, whose activities were impacted by weak rains.
The price of an acre in Kiserian rose 16.6 per cent to Sh9.4 million from Sh8.06 million in 2020, while in Juja it rose 17.5 per cent from Sh14.8 million to Sh17.4 million rose.
In Athi River, land sellers increased their price for an acre by 4.86 per cent from Sh14.4 million to 15.1 million in 2020, while Syokimau’s price rose by 11.3 per cent from Sh24.6 million on 22 .1 million Sh rose.
However, land in most suburbs remains prohibitively expensive, costing up to Shsh409.4 million and Shh389.9 million per acre in Kilimani and Parklands respectively.
The availability of land for sale in upscale suburbs is also limited, and lots are also divided into larger sizes of half an acre and up in most areas.
Price gains were therefore limited in the suburbs, where Muthaiga made the biggest gain at 6.5 per cent, with an acre selling for Sh197.8 million.
Langata followed, up 6.3 per cent to Sh68.5 million, while Kitusuru’s price per acre rose 6.1 per cent to Sh95.4 million.
Riverside, Loresho and Donholm led the price declines of 2.3 per cent, 2.0 per cent and 3.6 per cent to Sh330 million, Sh86.1 million and Sh68.9 million per acre respectively.
An acre in Upper Hill is the most expensive in the city at Sh499.9 million, followed by Westlands and Kilimani at Sh435.5 million and Sh406 million respectively.
The economic recovery has also helped property prices rise as more people who lost their jobs in 2020 return to work and businesses can regain a foothold.
This recovery has given homebuyers the confidence to invest in real estate, while developers are also able to move forward with projects they had put on hold amid prospects of a rental market revival.
However, in Nairobi’s satellite towns, price gains on house sales have been more modest, largely because most people settling in these areas prefer to build their own units.
HassConsult said the home sales market has been largely driven by higher demand for single-family homes, the supply of which in the market has declined over the past two decades.
Langata recorded the largest increase in average house price, up 11.2% to Sh33.2m, followed by Spring Valley and Loresho, up 9.1% to Sh71.3m and 7.5% to Sh55.7m. sh
House prices fell 2.5 per cent to Sh93.3 million and 0.8 per cent to Sh82.9 million in Runda and Muthaiga.
Infrastructure developments and restrictions have also emerged as a major factor in the growth of land and house prices in the city.