Nairobi has been ranked ahead of London in a global index that tracks price movements in the top five percent luxury residential properties across 45 cities in the world, raising the status of Kenya’s capital as a favourite investment destination in Africa.
The Prime Global Cities Index by realtor Knight Frank, which listed Nairobi as the only African city listed among 45 global cities that recorded annual growth in the third quarter of 2022, shows that the city’s ranking has moved up seven places to 29 in the 12 months to September from 35 in the same period last year.
This was two positions ahead of London, which ranked 31, and one position behind Geneva.
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The jump in Nairobi’s position comes after luxury houses registered a 2.9 percent price growth in the period from 1.3 percent over a 12-month period to September 2021- a time when Kenya was reeling from setbacks presented by the Covid-19 pandemic.
London recorded a 2.7 percent price rise while Geneva at 3.2 percent over the period.
Nairobi is a favourite destination for expatriates and companies who want to set up on the African continent. It hosts the UNEP headquarters and is a regional hub for multinationals that want to expand into the region, driving up the demand for luxury houses.
Luxury house prices soared amid persistent demand for properties in high-end areas even during the electioneering period.
“There is a strong desire from buyers to find good value properties. There has not been much certainty over the last two years with Covid and elections. With that all behind us buyers are keen to transact,’’ said Tarquin Gross, head of residential agency at Knight Frank Kenya.
“Sellers at the beginning of 2022 were willing to take up to 15 percent less than their asking price and although sellers aren’t now willing to take as much as 15 per cent they are still open to offers.’’
The index tracks nominal prices in local currency and targets high-end areas such as Karen, Muthaiga, Kitisuru and Runda.
Houses in Nairobi posted a change of 0.4 per cent in the last six months and 0.5 percent over the last three months.
The rise in prices of prime properties in Nairobi comes at a time when the global price of prime properties dipped for a consecutive quarter.
Of the 45 cities tracked, 19 saw prime prices decline between June and September 2022, up from seven in March 2022.
Dubai had the fastest-rising prime price in the period at 88.8 percent.
The surging in prices in wealthy suburbs could also indicate that investors were looking at real estate at a time when equities share prices dipped.
Investors and buyers were expected to be conservative in the market during the electioneering period, which was seen as causing a shaky economic environment and a correction in property rates.
The growth means expected capital gains on investors’ investments.
“For developers, it means there is an appetite to buy again from buyers. We are already seeing interest from developers looking for good value redevelopment sites,” Gross added.
“Now that the election is over, we are seeing expatriates returning to Kenya and foreign companies growing their operations, which means rental demand is increasing.”
Also read: Nairobi luxury home prices rise 3.5 percent
HassConsult property index for the period ended September that showed strong house price movements for the detached housing segment -townhouses and villas- — in upper suburbs where demand for units is high due to ample spacing.
The excessive demand for the units has been on the back of increasing prices in line with inflation.
Transaction volumes are expected to rise within Nairobi with the National Land Information Management System (Ardhisasa), a digital platform easing processing of property searches.