Unpacking The Rental Sector Performance For The Nairobi Metropolitan

By Soko Directory Team / Published August 1, 2022 | 10:18 am




KEY POINTS

In the satellite towns, houses in Ongata Rongai recorded the highest q/q and y/y price appreciation of 3.4 percent and 13.0 percent, respectively, driven by increased demand resulting from the affordability of housing units in the area.


Nairobi

KEY TAKEAWAYS


The average q/q and y/y selling prices for land in the Nairobi suburbs appreciated by 0.2 percent and 0.9 percent, respectively, whereas the average q/q and y/y selling prices for land in the satellite towns of Nairobi increased by 4.1 percent and 10.5 percent, respectively


Hass Consult released their House Price Index Q2’2022, a report highlighting the performance of Nairobi Metropolitan Area’s (NMA) Real Estate residential sector.

In the report, the average q/q selling prices for houses increased by 3.3 percent in Q2’2022, while on a y/y basis, the average selling prices appreciated by 10.5 percent, mainly driven by an increase in market interest rates and the overall construction costs of materials.

In the Nairobi Suburbs, Lang’ata was the best performing node having recorded a capital appreciation of 5.3 percent q/q and 12.5 percent y/y attributed to increased demand, whereas apartments in Kileleshwa recorded the highest y/y price correction of 9.1 percent, following reduced uptake as clients preferred renting of apartments in the area rather than buying.

In the satellite towns, houses in Ongata Rongai recorded the highest q/q and y/y price appreciation of 3.4 percent and 13.0 percent, respectively, driven by increased demand resulting from the affordability of housing units in the area.

The overall asking rents in the NMA slightly increased by 1.1 percent q/q and 2.4 percent y/y, driven by an increase in the overall demand for rental units. Apartments recorded the highest increase in asking rents of 2.0 percent q/q compared to detached units at 0.5 percent q/q, as the majority of tenants prefer renting apartments due to affordability.

In the Nairobi suburbs, houses in Ridgeways realized the highest y/y rent appreciations of 6.1 percent, with demand being driven by the serenity of the area, ample amenities and infrastructure such as the Ridgeways Mall and Kiambu road among many others, ample security further enhanced by the area’s posh neighborhood estates such as Garden Estate and Muthaiga.

For the satellite towns, apartments in Kitengela realized the highest rental rate increase by 16.4 percent y/y due to increased demand resulting from the affordability of the units, whereas houses in Ongata Rongai recorded the highest rental rates decline of 2.6 percent q/q as a result of people preferring to buy the housing units rather than renting them.

The findings of the report are in line with our Cytonn H1’2022 Markets Review, which highlighted that the average y/y price appreciation for houses in the NMA increased by 0.9% driven by an increase in property transactions, as well as the construction costs.

Hass Consult also released the Land Price Index Q2’2022,  a report highlighting the performance of the Real Estate land sector in the Nairobi Metropolitan Area (NMA). Notably, land prices in satellite towns rose to an all-time high in Q2’2022 on renewed demand and emerging opportunities.

The average q/q and y/y selling prices for land in the Nairobi suburbs appreciated by 0.2 percent and 0.9 percent, respectively, whereas the average q/q and y/y selling prices for land in the satellite towns of Nairobi increased by 4.1 percent and 10.5 percent, respectively.

Spring Valley was the best performing node in the Nairobi suburbs with a q/q and y/y price appreciation of 3.4 percent and 13.4 percent, respectively, attributed to increased demand for land in the area that resulted from; adequate infrastructure such as the Mwanzi Road, serene and quiet environment, ample security, affluent neighborhood as it’s also surrounded by areas such as Kitisuru and Parklands, and, nearness to amenities such as Westgate Shopping Mall. On the other hand, Runda recorded the highest y/y price correction of 3.3% due to a declined demand.

For satellite towns, Juja was the best performing node with a q/q and y/y capital appreciation of 6.4 percent and 20.9 percent, respectively, attributed to increased demand for development land, particularly for student housing facilities as the area is largely inhabited by students from institutions such as the Jomo Kenyatta University of Agriculture and Technology.

On the other hand, Limuru was the only node with a price correction y/y, which came in at 6.6% driven by low demand for land in the area, given that it is relatively far from Nairobi.

The findings of the report are also in line with our Cytonn H1’2022 Markets Review, which highlighted that the average selling prices for land in the NMA appreciated by 3.1%. This was mainly attributed to; i) high population and urbanization growth rates driving demand for land, ii) improved development of infrastructure such as roads, railways, water and sewer lines, and, iii) increased construction activities particularly in the residential and infrastructure sectors thus fueling demand for land.

Related Content: Centum Real Estate Posts Ksh 650 Million Operating Profit




About Soko Directory Team

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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