Laikipia’s Real Estate Sector is growing in Bounds – Report

Cytonn Investments has this week focused on Nanyuki town in Laikipia County and published their findings on the Nanyuki real estate market as shared.

Nanyuki real estate market recorded an average rental yield of 4.7 percent for the residential sector, 7.6 percent in the commercial sector and a capital appreciation of 4.7 percent in the land sector, compared to the Nyeri market average of 5.1 percent, 6.3 percent, and 19.1 percent, respectively.

Overview of Laikipia County, zeroing into Nanyuki Town

Laikipia County is at the border of Samburu County at the North, Isiolo County stands at the North East, Meru County at the East, Nyeri County at the South East, Nyandarua County and Nakuru County at the South West and Baringo County at the West.

The county has a total population of 479,072 and a population growth rate of 2.5percent as at 2017 according to the Laikipia County Statistical Abstract.

According to Kenya National Bureau of Statistics (KNBS), the Laikipia county Gross County Product per Capita (2017), stands at 1,533 Dollars, thus ranked 17^th County in Kenya.

Tourism is one of the highest contributors to Laikipia County’s economy as it is richly endowed with wildlife, distributed in most parts of the county extending to Aberdares.

Laikipia gets its water from the Nanyuki water and sewerage Company limited (NAWASCO) and Nyahururu water and sewerage company (NYAHUWASCO).

The area has good mains electricity, landline, and mobile telephony. Main roads in the area are bitumen and in a good state of repair and maintenance while feeder roads in the ranches are paved and earthen roads that are navigable.

Key to note, in the wake of a growing population and evolving economic state of the county, the county government is in the process of revising the zoning regulations that are intended to guide land use standards, zoning schemes and ordinances for all urban settlements in the County, to facilitate physical planning.

The main towns in Laikipia County include; Nanyuki town, which temporarily hosts the county headquarters, Dol Dol, Rumuruti and Nyahururu.

Cytonn focused on Nanyuki Town, which lies northwest of Mount Kenya and currently has a projected population of 63,022.

Nanyuki is famous for farms, ranches, game parks and wildlife conservancies in the region, in addition to hosting the British Army Training Grounds.

Factors Driving Real Estate Investment in Nanyuki, Laikipia County

Over the last 5-years, Nanyuki has witnessed increased real estate activities in the town and its environs driven by:

• Tourism

Nanyuki hosts key tourist attractions such as the Ol Pejeta Conservancy and Mount Kenya National Park. The town thus acts as a major tourist circuit to Mt. Kenya and the Northern Region, enhancing demand for hospitality services which continues to promote the hospitality sector,

• Growth of Small and Medium Enterprises (SMEs)

The informal sector constitutes an estimated 98 percent of business in Kenya, contributing to 83.4 percent of jobs as per the 2018 KNBS Economic Survey.

There is an increase in the number of SME’S due to ease of business registration as it now takes a maximum of 2 weeks. Nanyuki hosts several of these companies such as Mawingu Networks that require office space and housing for the employees, hence drive the demand for real estate.

• Devolution

Decentralization has opened up major towns across the 47 counties attracting government institutions, private investors and entrepreneurs across all the county headquarters.

This has increased the urbanization rate hence attracting financial institutions such as ECLOF Kenya and Faulu Kenya, to the county level to tap into the unbanked population.

The positive demographics, attributable to devolution have thus, created demand for office space, retail space and residential units to host investors and government officials, and

• Hosts the British Army Training Grounds

The British Army Training Unit Kenya (BATUK) is a training support unit of the British Army located in Nanyuki under long-standing cooperative agreements with the country. The presence of the same has resulted in a growing demand for housing by the army officers mainly hosting their families in the town.

Nanyuki Real Estate Market Performance

The market research focused on;

• Plinth Area

Research on the size of the units found in the market allows us to gauge the current offering, and establish the homebuyer’s preferences for sizes of houses,

• Annual Uptake

This allows the investor to appreciate the rate, at which available property is sold over a specific period, thus helps him/her gauge how fast they can exit the market,

• Occupancy

This measure the number of units or the size of the development that is let out, in order to inform on the expected rental yield of the building.

• Prices

Research on prices will be used in comparison with our products against the market prices,

• Rental Rates

Research on rental rates allows us to inform prospective investors on the rental yield they can gain from investing in the Nanyuki Real Estate Market.

We covered the residential, commercial (retail and offices), hospitality (holiday homes) and the land sectors. The performance per theme was as follows:

Residential Sector

The residential housing development market in Nanyuki is still nascent with most of the estates, having existed for less than 3 years. The key drivers of the growth include; the British Army station, government decentralization, urbanization and growth of the middle class in the region.

The key residential areas are distributed within the Nanyuki CBD, Maiyan and near the airstrip, and mainly comprise of owner-built and occupied stand-alone houses, as the market lacks institutional developers.

The residential market in and around Nanyuki town is mainly rental, as most of the investors target foreigners on long term stay of approximately 2 years.

Commercial Sector

The commercial sector in Nanyuki is yet to record entry of quality commercial space especially in the office sector where most of the offices are classified grade C and below.

The last 2-years have seen the establishment of new buildings such as the Ubii Plaza, which lack modern facilities such as lifts.

The retail sector has two formal shopping malls, Nanyuki Mall and Cedar Mall with some of the key retailers being Botswana’s Choopies, Chandarana FoodPlus Supermarket and American fast food restaurant chain, Kentucky Fried Chicken (KFC).

Land Sector

Land prices in Nanyuki town are highly dependent on the proximity to the main roads and proximity to the CBD.

In Nanyuki’s CBD, the land price is relatively high and sells at an average price of up to 100 million shillings per acre.

An acre sells at an approximately 1.6 million shillings for an acre in the outskirts costs. Most of the land in Nanyuki utilized is as ranches that are privately owned and could be as large as over 100 acres each. Despite having several ranches, the market has continued to embrace the selling of plots mainly quarter acres and eighths of an acre with several property agents having entered the market.

The plots for sale recorded average annual sales of 45.8%, attributed to a growing demand for development land in the area fueled by speculations for higher property value boosted by the opening of the Northern Corridor.

Holiday Homes

Nanyuki hosts key tourist attractions such as the Ol Pejeta Conservancy and Mount Kenya National Park, making the town a major tourist circuit to Mt. Kenya and the Northern Region.

This has continued to create demand for hospitality services and facilities, thus the development of holiday homes such as Maiyan Homes and the Mt. Kenya Wildlife Estates.