Rents for prime residential areas in Nairobi dipped by 2.9 per cent in the first quarter of the year as a result of the increased supply, according to a new report by property management firm Knight Frank.
Despite the slump in high-end residential rents, prices of prime homes in Nairobi grew by 3.3 per cent in the first three months of the year according to Prime Global Rental Index (PGRI) by the firm.
South Africa’s Cape Town posted a 1.5 per cent increase in prime residential rents within the same period as Toronto topped the luxury residential rents index with an increase of 8.9 per cent.
The slump in rents in Nairobi is also a result of decrease in demand, a factor that is attributable to multi-nationals downsizing or closing their business in Kenya. Expatriates dominate the top-end market as they are paid housing allowances or are housed under corporate arrangements.
“Demand for prime rental properties has traditionally been from expats. Rents have trended lower as we are seeing weakened demand from this segment of the market due to multinational firms downsizing as a result of adverse economic circumstances driven by low commodity prices,” said Charles Macharia, senior research analyst at Knight Frank Kenya.
The index tracks luxury residential rents across 17 key world cities. In Nairobi, the PGRI tracks prime residential rents starting from Sh250,000 for apartments and Sh300,000 for townhouses and stand-alones.