Markets & Finance
Land prices soar 20pc on Nairobi Expressway liftThursday November 10 2022
The opening of the Nairobi Expressway has seen land prices along the Mombasa Road commuter belt and its satellite towns grow at the fastest pace in the past six years, unlocking value for investors in Syokimau, Kitengela and Athi River.
HassConsult’s third quarter report also shows that house prices in Nairobi and its environs jumped by 10.3 percent in the year to September, reversing a painful trend witnessed in the past six years.
The value of land surged by a high of 9.49 percent in the year to September due to better accessibility in the towns through improved infrastructure.
This is the fastest increase since 2016 when the growth stood at 21.39 percent, reflecting property market appreciation over the last six years on account of freed up traffic which has benefited home buyers seeking to settle away from the busy capital.
But it is the towns along Mombasa Road that recorded the highest windfall in land prices after the opening of the Nairobi Expressway that has seen them become more accessible to investors and homeowners.
The HassConsult report shows the asking price of an acre of land in Syokimau rose by 20.1 percent from last year to Sh27.7 million on average, with some quoting up to Sh31.6 million.
Buyers seeking to invest in Mlolongo will cough up to Sh33.2 million after the price of an acre rose by 4.6 percent, the town having benefited from the launch of the Expressway this year and the standard gauge railway earlier.
Kitengela and Athi River recorded a land price jump of 11.2 percent and 5.3 percent respectively in the period under review.
“Expansion of infrastructure and road projects in satellite towns is easing pressure for Nairobi land property development,” said Sakina Hassanali, the head of development consulting and research at HassConsult.
Collins Chacha of Universal Homes said that the Expressway had shortened commuting from Nairobi’s Westlands, where most offices and potential homebuyers work, to Kitengela to around 15 minutes.
“Before the Expressway, going to Kitengela was very hard and one had to plan their whole day around that event. Now one can commute there in 15 minutes and have several meetings later while at it,” said Mr Chacha.
Real estate expert Daniel Ojijo, who is also the chairman of Universal Homes, reckons the rising population and demand for housing in the satellite towns is also pushing land prices up.
“Another factor is cheaper land in the outskirts of Nairobi as compared to real estate in the central business district and within Nairobi,” added Mr Ojijo.
The price of land in towns away from the city increased by 9.49 percent in the year to September, compared to 5.55 percent in the year before. Satellite towns recording an increase in the cost of plots included Juja where an acre of land touched a historic high of Sh18.8 million.
“Juja has benefited from road infrastructure and investors getting drawn to develop housing and affiliated property for higher education centres located in the area,” the HassConsult report says.
The average price of land within Nairobi depreciated to Covid levels when the growth plunged to -2.17 percent in 2020 due to the economic headwinds related to the pandemic.
Real estate has in the past few years been hit by a lack of credit and affordability after years of booming prices, and the Covid-19 pandemic that greatly eroded spending power among prospective buyers.
Also read: House prices rise at fastest rate in 11 years
In the period under review land prices within Nairobi fell by -0.13 percent compared to a growth of 0.82 percent last year due to the reduced demand for the prime real estate.
As land prices rose to new highs, property in general grew by 10.3 percent in the same period.
Also read: Areas with biggest jump in land prices
Townhouses and villas bucked the trend by recording a growth of 16.6 percent in the year to September on increased demand while apartment prices fell slightly by -0.4 percent.
The report revealed stronger house price movements in the villas and townhouses segment in the upper suburbs where demand for units with ample parking was high.
The drop in apartment prices signalled that sellers in the highly price sensitive market were showing more flexibility in accepting negotiated asking prices.
“We are in a price-sensitive market and owners are taking the hit to sustain sales. Despite this, projects that have excessive demand are increasing prices in line with inflation. These projects include townhouses and villas in higher end areas,” said Ms Hassanali.
The average value for a one- to three-bedroom property is currently Sh12.5 million while a four- to six-bedroom property is currently valued at Sh40.1 million.
In the Nairobi suburbs, houses in Lang’ata, Donholm and Loresho performed best, posting a 14 percent, 11.7 percent and 11.1 percent increase over the last year to September while apartments in Lang’ata, Parklands and Riverside saw prices increase by 6.2 percent, 3.0 percent and 1.2 percent.
Apartments in other suburbs recorded a depreciation in value.