Property developers abandon bungalows for apartments to fetch high yields
Posted Tuesday, August 28 2012 at 17:52
- Going by the fast pace with which the high-rise apartments are coming up, soon maisonettes and bungalows will be a thing of the past especially in low and middle-income areas in the suburbs.
- HassConsult, a real estate company, notes that apartments currently make up about 50 per cent of residential units in city suburbs.
- Yields from apartments have also grown as fast as the units that are replacing standalone and townhouses.
- Surge in rental prices in city suburbs, according to the firm, is brought about by increased volume of people seeking the same pool of rental properties, mainly apartments, and landlords seeking to cover high finance and other costs.
Some months ago, space in Donholm estate was occupied with six bungalows, neatly built to suit demand for quality housing. The houses, all which had a servant quarter, parking bay and own compound, were on high demand in the residential area east of the capital, Nairobi.
But that was then, today, the bungalows are no more. They have been demolished, and in their place stands a massive four-storied building, with about 20 apartments.
Maisonettes and bungalows that were once in vogue in suburbs are being replaced with high-rise apartments as demand for houses increases, the city modernises, and property developers seek better yields.
Most of the apartments replacing the standalone houses are at least three-storied, with the highest going up to seven floors. The buildings host at least ten houses that have bedrooms ranging from one to four.
Going by the fast pace with which the high-rise apartments are coming up, soon maisonettes and bungalows will be a thing of the past especially in low and middle-income areas in the suburbs.
"Why have three maisonettes that fetch you less than $1,200 (Sh101,000) a month when a three-storied apartment can give you thrice that amount?" posed Antony Kuyo, an agent at Avent- which manages properties in city suburbs.
Mr Kuyo noted that most property owners with standalone houses are either demolishing or turning them into high-rise apartments for better yields.
"This is what is happening in most suburbs across the city. People are no longer constructing standalone houses, at least not for commercial purposes. It is uneconomical because demand for houses is high," he said.
According to the property agent, it is just a matter of time before standalone and townhouses become extinct.
"The houses are dying because circumstances dictate. The city population is rapidly growing and people want to utilise any land they have effectively. Besides that, the demand for houses is three times high than what it was some years back. Apartments, thus come in handy," noted the agent, who has been in the business for over five years.
While a three-bedroom standalone house, for instance, in Donholm, will fetch a landlord $285 (Sh24,000) a month, an apartment, with the same number of rooms will rake in almost a similar amount.
"The difference is small and in some cases, rent for some apartments is higher and because of economies of scale, apartments are far much profitable," he said.
HassConsult, a real estate company, notes that apartments currently make up about 50 per cent of residential units in city suburbs.
In its recent Mix by Year analysis, which is a measure of the percentage that each type of property represents in the market, the company observed that the number of apartments in Nairobi had doubled that of standalone and town houses in the last decade.
"Apartments take up 43.6 per cent of the market, townhouses 26.9 per cent while standalone houses 29.5 per cent," said the company in its latest property survey.