Estate developers make big bets on Nairobi outskirts
Posted Wednesday, January 23 2013 at 19:32
- Townhouses, apartments and stand-alone houses on Nairobi outskirts had higher growth in capital and rental yields between October and December compared to similar houses within the city.
- Hass Consult head of research and marketing Sakina Hassanali said the price increases were due to buyers’ bet on both capital gains and high rental yields in the outer estates unlike Nairobi suburbs.
Residential and commercial property on the outskirts of Nairobi recorded the highest increase in prices in the last quarter of 2012, a survey by real estate firm Hass Consult shows.
Townhouses, apartments and stand-alone houses in counties such as Kajiado, Machakos and Kiambu had higher growth in capital and rental yields between October and December compared to similar houses within the city, whose rate of growth is on a plateau phase.
“The steepest sales price increases came in outer zones such as Karen, Ongata Rongai and Komarock where prices rose by around 20 per cent,” said Hass Consult in its property index annual report for 2012.
Hass Consult head of research and marketing Sakina Hassanali said Wednesday the price increases were due to buyers’ bet on both capital gains and high rental yields in the outer estates unlike Nairobi suburbs such as Westlands, Riverside, Kilimani and Lang’ata whose growth appears to have peaked.
The four suburbs saw asking prices increase by between one and two per cent in the last quarter of 2012.
The Hass Consult Composite Index looks at rental yields and asking prices of stand-alone houses, townhouses and apartments across 43 suburbs in Nairobi and neighbouring counties.
The city suburbs are classified into three zones, A,B and C, where A is high, B middle and C lower end.
The real estate consulting firm, however, noted that there are suburbs in the zones that go against the general trend due to the condition of roads and other factors.
“Not all outlying suburbs are outperforming. Buyers need to be mindful of the popularity, aesthetics and accessibility of an area, as well as general trends,” said Ms Hassanali.
For instance, the survey found that the average sale price for a house in Ngong, placed in Zone C, increased by eight per cent to Sh8.4 million from Sh7.8 million in fourth quarter of 2012 when compared with the fourth quarter of 2011.
A similar house in Lower Kabete, placed in Zone A, cost Sh47.3 million from Sh41 million over a similar period or a 15 per cent increase.
Jenga Web managing director Nathan Luesby said that the sluggish increase in prices in the Nairobi suburbs is the result of a glut.
The annual report also shows that the real estate sector breathed a sigh of relief in the last quarter of 2012 following the gradual lowering of interest rates.
Hass Consult said that the Central Bank of Kenya (CBK) cutting of the policy rate saw rent and sale prices increase since it encouraged developers to seek credit.
Hass Consult said that re-energised activity was catalysed by the CBK reducing the benchmark rate to 11 per cent from 13.5 per cent between the third and fourth quarters of 2012.