High Acreage Prices in Nairobi Suburbs Sees Investors Moving to Satellite Towns

Advertised land prices in Nairobi have risen five-fold in the last 8 years, up 5.74 times from 2007 to an average of KES 173.6 million per acre.

Over 2015, Nairobi land prices rose by 9 percent with Kitisiru, Loresho and Gigiri recording the highest increases in the year at 26.1 percent and 14.6 percent respectively. Spring valley has the lowest growth in land prices among the city’s suburbs, having recorded a 3.9 percent drop in 2015 alone.

Land prices in Nairobi’s satellite towns tracked similar growth rates to land in Nairobi at 11.9 percent over 2015 with Kiserian running well ahead of the average at a growth rate of 25.3 percent. Land in Mulolongo, however witnessed annual price corrections with a fall of 0.4percent over the year.

While investment in land outperformed all other asset classes, average price per acre disparity between Nairobi (Kshs 173.5m) and its satellite towns (Kshs 15.6 per acre) worked to move investor dollars out of Nairobi to reap land investment returns within its satellite towns.

Hundreds of investors seeking favourable returns in land are moving to satellite towns as acreage in the city rise five-fold to an average of Kshs 173.6million. The increased appetite for land in Nairobi’s satellite town comes in favour of lower average prices per acre at Kshs.15.6million even as land more than quadrupled its price over the last eight years in these areas.

“Due to the rising demand, land prices in these satellite towns have now tracked similar growth rates to land in Nairobi 11.9 per cent over 2015 with Kiserian running well ahead of the average at a growth rate of 25.3 per cent over the year,” said Ms. Sakina Hassanali, Head of Research and Marketing at HassConsult.

In the fourth quarter of 2015, land in Nairobi’s suburbs rose by 9per cent with Kitisuru, Loresho and Gigiri recording the highest increases in the year at 26.1per cent, 23.4per cent, and 14.6per cent respectively. Spring valley has the lowest growth in land prices among the city suburbs, having recorded a 3.9per cent drop in 2015 alone. Notably, land prices in Nairobi’s upcoming satellite towns of Kitengela, Kiserian, Athi River are rising faster compared to that of traditional high end suburbs of Karen, Ridgeways, Lavington and Runda.

On average, land prices across suburbs in the city steadily grew bucking the sluggish economic growth and remaining the number one asset for investors as compared to stocks, bonds or 91-day treasury bills.” Investors focused on capital growth are increasingly turning focus into land as the stock market and other asset classes continue to drop in favourability,” said Ms. Sakina Hassanali. An acre piece of land in the city’s suburbs of Kitisiru gave investors the highest returns in 2015 with 26.1per cent growth in price while land in Kiserian accrued 25.3per cent more in the year. “To maximize returns, these investors are now buying huge chunks of land for subdivision and resale in Nairobi’s satellite town, “said Ms. Hassanali.

Article by Marion Ayoyi.