Apartments in high demand as land prices shoot up
Posted Thursday, July 19 2012 at 21:14
In Kenya’s fast-paced homes market, apartments have become the one segment that sold most units in the past 10 years.
The units have grown to account for 43.6 per cent of the entire homes market compared to 29.5 per cent for townhouses and 26.9 per cent for stand-alones, according to the Hass Property Index for the second quarter of the year that was published last week.
This is a great shift from the composition of the property market years ago when apartments comprised 23.5 per cent of the market, town houses 24.5 per cent and stand-alone units were at 52 per cent.
Property dealers expect the trend to continue, eating into the share of stand-alones and other types of properties.
Timothy Mutisya, the commercial director at Lloyd Masika, attributes the rising preference for apartments to the revision of Nairobi City Council regulation, which now allow apartments to be developed in areas that were exclusively for stand-alones and town houses.
“In Nairobi, that revision allowed apartments to be developed in areas such as Kileleshwa, Kilimani… along Lenana Road,” Mr Mutisya said.
In addition, apartments cost much less than stand-alones and townhouses making them more appealing to first time homeowners. Stand-alone houses include bungalows, cottages and villas either on their own plot or in a gated community.
Apartments remain the most affordable type of property. In Thika, the price of three-bedroom apartments — with parking, landscaped gardens, shopping facilities, parking for two cars and a garden — goes for Sh5.6 million.
In Kileleshwa, a two-bedroom apartment goes for around Sh13 million. The price difference is attributed to the neighbourhood and the proximity to the city.
“You can get an apartment in Kileleshwa for Sh14 million and in Embakasi, some apartments go for Sh6 million; and yet the town houses in Kileleshwa range from Sh25 million to Sh30 million,” said Mr Mutisya.
According to the Hass index, average price for stand-alones is currently Sh32.6 million up from Sh8.8 million in 2000. On the other hand, the price of apartments increased by 2.2 per cent to stand at 11.7 million from 5.5 million in 2000.
“Land continues to become scarce and the price is hitting the roof. Developers prefer to make as much returns as possible from these properties,” says Chesbil Ochieng, marketing manager at Villa Care.
Mr Ochieng says while developing stand-alone houses is not expensive, their price shot up due to the skyrocketing price of land.
Mr Mutisya, while agreeing that land has become scarce and expensive, notes that ongoing infrastructural development have opened up new areas for acquisition of land.
“The construction of roads has opened up new areas, like the areas where the bypasses go through have been opened up,” observes Mr Mutisya.