Serviced Apartments In Nairobi Recorded Rental Yield Of 4.0% In 2020

Serviced apartments within the NMA recorded an average rental yield of 4.0 percent in 2020, 3.6 percentage points lower than the 7.6 percent recorded in 2019 according to the latest report from Cytonn Investments.

This is attributed to declines in monthly charges per SQM and occupancies from 2,806 shillings to 2,445 shillings and from 79.4 to 48.0 percent respectively.

The decline in performance is attributable to subdued demand for hospitality facilities and services due to the COVID-19 pandemic which saw the government ban all international flights and local flights into Mombasa and Nairobi, implement partial lockdown within the NMA.

Some serviced apartments have also been issuing discounts to attract and maintain clients amid a tough economic environment occasioned by reduced disposable income.

According to the report Westlands -Parklands was the best performing node, recording an average rental yield of 6.1 percent, 2.1 percentage points higher than the 4.0 percent market average.

This was attributed to the proximity to business nodes such as Kilimani, Nairobi CBD, and UpperHill, availability of amenities such as the Westgate Mall and Sarit Centre, ease of accessibility, and proximity to the main airports that is Jomo Kenyatta International Airport (JKIA) and Wilson Airport.

Kilimani was the second-best performing node with an average rental yield of 4.8 percent compared to the market average of 4.0 percent.

This is however a decline of 4.7 percentage points attributed to a 31.6 percent decline in occupancy rates and a 20.5 percent correction in the monthly charges per SQM.

Thika Road (Muthaiga North, Mirema and Garden Estate) recorded the lowest rental yield at 2.0 percent, and this was attributed to the relatively low charge rates for apartments within the area, given its unpopularity, due to lack of modern and quality serviced apartments in the area, the significant distance from main commercial zones, in addition to security concerns as the area is not mapped within the UN Blue Zone.

READ: Westlands And Karen Named The Best Performing Retain Nodes In Nairobi