Nairobi satellite towns post slow growth in land prices

A view of Thika town in Kiambu County on July 21, 2022.

Photo credit: File | Nation Media Group

Land prices in Nairobi’s surrounding towns grew 1.9 percent in the last quarter of 2024, marking the slowest pace of appreciation in 18 months in a tough economy where purchasing power was hurt by job losses and high interest rates.

Analysis of land prices in Nairobi done by real estate firm HassConsult found that the average cost of an acre in the satellite towns rose by 1.9 percent to Sh30.9 million in the three months to December 2024. In the previous quarter, the average price had gone up by 3.02 percent.

The fourth quarter price increase was the slowest seen since the quarter to June 2023 (1.22 percent).

On an annual basis, land prices in these towns grew by 10.6 percent, up from 9.3 percent in 2023, reflecting the relatively higher pace of growth witnessed in the first half of the year.

The cooling of prices reflected the slower GDP growth in the first three quarters of 2024 compared to corresponding periods in 2023.

GDP growth last year stood at five percent, 4.6 percent and four percent in the first, second and third quarters, down from 5.5 percent, 5.6 percent and six percent in the respective periods in 2023.

“Periods of economic uncertainty and slowing GDP growth can lead to some developers putting off decisions to acquire land, thus reducing demand which drives prices higher,” said HassConsult head of development consulting and research Sakina Hassanali.

“It also shows that the infrastructure-led price boost in areas such as Thika, Kiserian, Mlolongo, and Syokimau is starting to wane, given the sharp price jumps of previous quarters.”

Nine out of the 14 towns tracked by HassConsult saw slower quarter-on-quarter price expansion, led by Thika and Mlolongo where growth fell from 6.3 percent and 6.6 percent in the third quarter to 0.9 percent and 1.1 percent, respectively, in the fourth quarter. 

Demand for land in the outlying towns has been driven by middle class buyers looking for affordable plots to put up their homes, and commercial developers putting up apartments and other facilities to serve the middle class market.

These areas have a lower cost of land per acre compared to suburbs closer to the city, where an acre cost Sh214.2 million on average in December 2024.

Last year, land prices in the suburbs grew by 6.5 percent, helped by demand from developers seeking space to put up apartments in areas such as Parklands, Kileleshwa and Lavington.

On a quarterly basis, prices grew by 1.7 percent in the three months to December, marginally up on the 1.6 percent expansion seen in the third quarter of the year.

Land for commercial or office developments however remained the most expensive in the city, with an acre in Upper hill costing Sh522.7 million and Westlands at Sh487.3 million.

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