Land prices in Nairobi and the surrounding areas are expected to increase by 10.2 percent in 2018 according to a report released by Cytonn Report.
According to Cytonn, the performance of land prices in Nairobi Metropolitan is set to remain positive based on a stable performance over the last six years from 2011 to 2017.
“The market is recovering from 2017 deep where the appreciation averaged at 6.4%, 11.2% points lower than the 17.6 percent recorded in 2016 mainly as a result of reduced economic activities due to the prolonged electioneering period,” read a report from Cytonn.
In the year 2017, land in Nairobi Metropolitan Area recorded positive performance with an annual capital appreciation of 6.4% translation to a 6-year CAGR of 17.4 percent despite the political uncertainty brought about by the extended electioneering period.
“In 2018, we expect the sector’s performance to remain positive, driven by the conclusion of the 2017 electioneering period, population growth and urbanization currently at 2.6 percent and 4.4 percent per annum respectively, improved infrastructure, the relaxation of zoning regulations, increased demand for development land in satellite towns, economic growth with an average GDP growth rate of more than 5.0 percent over the last five-years and legal reforms in the land administration,” said Cytonn.
The key challenges expected to affect the sector’s performance include:
- High land costs up to 550 million shillings in areas such as Upperhill, hence impacting on financial viability on return to investor
- Communal ownership of land hindering land transfer,
- Difficult legal environments such as lack of clarity between the mandate of the National Land Commission (NLC) and the Ministry of Lands
- Physical challenges such as inadequate clean water, sewer and poor roads mainly in satellite towns.