Upperhill and Ruaka most expensive Nairobi Suburb and Satellite Towns
By Vera Shawiza / Published July 31, 2017 | 12:00 pm
House sales prices and rentals recorded a 3.1 percent and 2.0 percent drop, respectively, with land prices recording an increase of 0.7 percent and 1.0 percent in Nairobi Suburbs and Nairobi Satellite Towns, respectively, in Q2’2017, according to Hass Property.
“These areas have traditionally been prime and land has been hard to get and so when it is put up for sale in the market it is sold, further encouraging more owners to test the market.
Development minded investors on their part are opting to develop high-end gated communities as opposed to units that occupy large parcels of land,” said Ms Sakina Hassanali, Head of Development Consulting and Research at HassConsult.
The Hass Composite Sales Index recorded a 3.1 percent q/q drop while the Hass Composite Letting Index recorded a 2.0 percent q/q drop attributed to a decline in demand for residential property occasioned by a reduction in transaction volumes in the market.
According to the Hass Consult Property Price Indices Q2’2017 report which covered land and house price indices indicated a drop-in property prices.
Upperhill is the most expensive suburb with land now priced at Ksh550.9 million while Ruaka is the most expensive satellite town with land priced at Ksh81 million per acre
Detached houses recorded the biggest q/q price drop at 4.0 percent, while apartments recorded a 1.4 percent q/q price drop.
In Nairobi Suburbs, Eastleigh recorded the highest q/q increase in sales price of 2.0 percent, while Upper Hill and Kileleshwa recorded the highest decline of 2.8 percent q/q.
In Nairobi Satellite Towns, Limuru recorded the highest q/q increase in sales price of 3.2 percent, while Ruaka recorded the highest decline of 3.1 percent q/q.
In terms of rental charges, Eastleigh recorded the highest q/q increase in rental prices of 4.1 percent, while Langata recorded the highest decline of 5.9 percent.
In Nairobi Satellite Towns, Ngong recorded the highest q/q increase in rental prices of 5.3 percent, while Kiambu recorded the highest decline of 3.2 percent.
The report further noted that apartments account for 55.9 percent of all properties in the rental market and 40.1 percent of all properties on sale due to their higher potential to unlock value.
In general, the rental market performed better than the sales market recording less declines of 2.0 percent as compared to the sales market with a decline of 3.1 percent indicating that there have been increased interest in rental yields by the investors due to the marginal house price increases.
Poor performance in Q2’2017 was attributed to the tough macroeconomic environment that has persisted over the past year.
Cytonn Investments, in their weekly report stated that the current trend in the performance of rental market was temporary adding that they expected the market to stabilize on back of relatively strong GDP growth.
According to Cytonn, on average 5.4 percent in the last 5-years, the relatively high returns in real estate, the middle-class growth and urbanization rate at 4.4 percent, that have created demand for real estate. However, in the long run there will be price stagnation in selected markets with surplus supply.
The company noted that investors need to invest in proper market research and trend analysis to identify specific market niches.
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