Land in Nairobi Metropolitan area recorded much higher return on investment, compared to the competing fixed income asset classes, averaging 19.4 per cent in the last five years according to new research.
The 10-year bond yielded 12.3 per cent in the period with residential rental yields lagging at five per cent.
The 2017 Cytonn Investments Nairobi Area Metropolitan Land Report says that areas zoned for commercial use such as Kilimani, Upperhill and Westlands recorded the highest capital appreciation, increasing at a five-year Compounded Annual Growth Rate (CAGR) of 24.3 per cent.
Low-rise residential areas such as Spring Valley, Kitisuru and Karen recorded a five-year CAGR of 14.6 per cent.
However, high-rise residential areas such as Ridgeways, Kileleshwa and Kilimani recorded a significantly lower 17.7 per cent.
“The high growth rates in commercial zones was driven by increased demand for land for commercial use real estate, given its high returns with rental yields on average of more than nine per cent as compared to an average rental yield of five per cent for residential developments,” said Cytonn’s senior manager, regional markets, Johnson Denge during the release.
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