Price of land in Loresho jumps as upmarket cools off

What you need to know:

Road network that has opened up Ridgeways including through the northern by-pass is the main reason for the land price appreciation.
Prices have also risen as a result of the suburb neighbouring the diplomatic blue zone of Gigiri and Runda.
Current slow appreciation is, however, expected to give buyers a reprieve in the long-term since cost of land as a percentage of the development will reduce.

Plots at Ridgeways and Loresho residential areas have substantially appreciated as other city suburbs showed signs of cooling off.

The Nairobi Land Index by Hass Consult and Stanlib Investments shows between March 2013 and March 2014 the average price of land in Ridgeways and Loresho increased by 41.4 per cent and 41 per cent respectively, well above the 17.6 per cent average for 18 suburbs making up the index.

The report found that the price of an acre of land in Ridgeways as at the end of March was Sh64.9 million while a similar plot in Loresho was going for Sh70.7 million. Stanlib regional director James Muratha said the road network that has opened up Ridgeways including through the northern by-pass is the main reason for the land price appreciation.

“The upgrade in infrastructure around this area has really boosted Ridgeways,” said Mr Muratha.

He added prices in the area have also risen as a result of the suburb neighbouring the diplomatic blue zone of Gigiri and Runda.

The latest Nairobi Land Index report, however, said that while average land prices in major suburbs are still rising, the pace has generally decelerated.

The average price of land in Nairobi increased by 17.9 per cent in 2014 that is lower than the 42.5 per cent growth seen 2009. The slow pace is a result of major suburbs entering the mature phase of development.

Mr Muratha expects investors to become pickier on where to buy land since strong land price growth is not guaranteed for all suburbs.

“These results highlight the degree to which selecting the right location for land investments is now critical to returns. As the index reveals, almost any land purchase across Nairobi would have made very high returns in 2008 and 2009.”

Land prices in Eastleigh and Runda had annual returns of 1.5 per cent and 7.5 per cent respectively, that are lower than other asset classes such as stocks and bonds. Data from the Nairobi Land Index indicates the average price of an acre in Eastleigh was Sh292.6 million while an equivalent acre in Runda was priced at Sh67 million.

Karen, Kileleshwa, Kilimani, Langata, Lavington, Spring Valley, Upperhill, Westlands, Donholm, Gigiri, Kitisuru, Loresho, Muthaiga, Nyari and Parklands were the other suburbs included in the report.

Upperhill was the priciest suburb with an acre going for Sh484.8 million as at March this year.

On average prices in Nairobi have increased by 549.9 per cent since 2007. The current slow appreciation is, however, expected to give buyers a reprieve in the long-term since cost of land as a percentage of the development will reduce.