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Land Prices Spike with Ksh 1M Investment 10 Years Ago Now Worth Ksh 8.5M

BY Soko Directory Team · January 25, 2019 05:01 am

Land prices in Nairobi suburbs and satellite towns are projected to continue rising in 2019 owing to intensive development projects or immediate development potential, Hass Consult Land Price Index Quarter Four 2018 report says.

The report, which was released yesterday, also showed that a person who invested 1 million shillings in land around Nairobi ten years ago can confidently sell it for over 8 million shillings.

Hass Consult listed 14 satellite towns that have multiplied in land value over the past one year including Athi River, Juja, Mlolongo, Limuru, Kitengela, Ngong, Ongata Rongai, Ruaka, Ruiru, Syokimau, Thika, Tigoni, Kiserian, and Kiambu.

The report, however, notes that growth is more localized with some areas experiencing a rise of 16.5 percent while others have realized almost static pricing.

According to Sakina Hassanali, Hass Consult head of development consulting and research, each area emerges with its own independent market dynamic, driven by its own infrastructure changes, pace current building and development potential.

Shifting trends

Apparently, there a far wider spread in price changes has been realized considering development needs. As a result, there is widespread from the best performing suburbs to the worst performing become far wider.

“Because of this, the top performing areas continue to report exceptional price growth but areas with little remaining land or where there has been over-building had slow growth momentum last year,” she said.

Within Nairobi, the 1.1 percent rise was fairly stable; however, in Gigiri and Juja, land prices rose 10.6 and 16.5 percent to 250 million and 13.3 million shillings, respectively.

Meanwhile, the report also notes that if one made a land investment worth 1 million shillings in Nairobi Suburbs, it would be worth 6.3 million shillings in Upperhill, Westlands, Runda, Kilimani, Kitusuru, Spring Valley, Nyari, Muthaiga, Kileleshwa, Karen, Gigiri, Eastleigh, Donholm, Loresho, Ridgeways, Parklands, and Langata.

Alternatively, if you opted for rentals instead, the value would be 2.47 million shillings with bonds and savings now worth 2.54 and 1.31 million shillings respectively. However, if you invested in equities, you would have lost 480,000 shillings.

Global asset classes

According to Hassanali, land appreciation in Nairobi has outperformed global asset classes including both Gold and Oil. It has appreciated by 700 percent in the last ten years.

“Globally commodities are falling while and prices in Kenya continue to rise on average of 70 percent per year, compared to 50 to 20 percent in 10 years for other commodities. Going forward, Land will continue to outperform commodities as the government continues to invest in infrastructure throughout the country,” she said.

Over the last decade, gold prices rose by 155 percent, live cattle by 127 percent whereas crude oil performed the worst increasing only by 56.6 percent in value.

“Overall the market for land is becoming more sophisticated. Where change is underway, the returns remain outstanding for any asset class, but in areas that are now more fully developed, often a high density, prices are now more static,” said Hasannali.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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