Kilimani, Westlands, and Thindigua have been ranked as the best areas for apartment development according to its Nairobi Metropolitan Area Residential Report by Cytonn Investments.
Karen, Runda Mumwe, and Ruiru, on the other hand, have been said to be the best areas for detached units’ development.
According to the report, the sector recorded total returns of 8.2 percent per annum compared to last year’s 9.4 percent, attributable to the protracted electioneering period in 2017, as well as tight access to financing as a result of the interest rate caps.
However, select markets recorded relatively high returns, such as Kilimani with 13.9 percent total returns.
The report disclosed that the residential sector recorded total annual returns of 8.2 percent in 2017/18, a 1.2 percent points decline from the 9.4 percent total returns recorded in 2017. The average price appreciation was 2.8 percent with an average rental yield of 5.4 percent.
Notably, price appreciation declined by 1.0 percent points from 3.8 percent in 2017 to 2.8 percent for the period under review, which was attributed to the effect of last year’s elections and end buyer financing challenges, which has resulted in price stagnation.
Apartments recorded relatively high returns with an average of 8.7 percent per annum, 0.5 percent points higher compared to the overall residential market average of 8.2 percent.
Selected markets such as Kilimani, Upper Kabete, Thindigua, Ruaka and South B/C recorded double-digit total returns of 13.9 percent,11.9 percent, 11.2 percent, 11.1 percent and 10.1 percent respectively, with the sub-markets being boosted by good infrastructure, and accessible locations such as the Nairobi CBD, Upperhill, and Westlands.
In terms of investment opportunity for developers, the report noted the best places to invest in apartment units were Kilimani, Westlands, Thindigua, Ruaka, Upper Kabete and South B/C, driven by relatively high uptake while for detached units, the best areas were Karen, Runda Mumwe, Ruiru, South B/C, Kitisuru, and Ruiru.