- The decline in prices in the suburbs show the strain on the real estate market due the economic impact of the pandemic.
- The economic difficulty has also seen a surge in auctions and distressed property sales.
- But the falling prices have offered a bargain to investors with money for real estate.
Land prices in most satellite towns surrounding Nairobi dropped in the six months to September at the peak of the coronavirus economic hardships that cut demand for property.
Data from real estate research firm HassConsult, shows that prices of land in areas such as Kiambu, Syokimau and Kiserian dropped by between 0.54 percent and 8.1 percent.
This has put brakes to the feverish rises in house and land prices that had some Kenyans worried a bubble may be forming.
The decline in prices in the suburbs show the strain on the real estate market due the economic impact of the pandemic, which has driven businesses to losses and shed more than two million jobs.
The price of an acre in Kiambu dropped by the largest margin of 8.1 percent to Sh39.7 million in September compared to Sh43.2 million in March.
The strong appetite for Kiambu property in recent years has seen coffee plantations in the area cleared to pave the way for gated housing estates, shopping centres, and industrial infrastructure such as warehouses.
Besides farmlands in Central Kenya, the property boom also swallowed pastures in places like Ngong, Kiserian and Kitengela.
The boom in the satellite towns started in 2003 with the exit of the Moi regime accused of runaway corruption and has been driven by Kenya's growing middle class who cannot afford property in the capital.
Much of the demand also rode on Kenyans’ love affair with investment in land ahead of putting money in bonds, unit trusts or shares at the Nairobi Securities Exchange #ticker:NSE.
"Land prices are not going up anymore and investors have decided to sell at the current prices because there is no meaningful demand to drive price," said Sakina Hassanali, head of property development consulting and research, at HassConsult.
The economic difficulty has also seen a surge in auctions and distressed property sales, further weighing down prices at a time banks have also cut back on lending in general.
Loan defaults have hit property developers who had pegged their bets on Kenya’s real estate, eyeing outsized capital gains from rising land and home prices.
But the falling prices have offered a bargain to investors with money for real estate.
Kiambu was followed by Syokimau where land prices fell 3.14 percent to Sh21.6 million in the six-month period. In Ruiru, land asking prices dropped 3.03 percent to Sh25.6 million.
A few suburbs, however, bucked the trend to post gains in price per acre asking prices. Ongata Rongai led with a 5.94 percent price appreciation to Sh23.2 million.
Ngong was second with a 4.17 percent rise to Sh22.5 million, followed by Mlolongo at 0.72 percent to Sh27.8 million.
Prices in Athi River and Kitengela were unchanged at Sh13.7 million and Sh12.5 million respectively.
The price drop in Kiambu was large enough to wipe off five-year land apperception in the area. The current asking price of Sh39.7 million in the area is 3.9 percent below the Sh41.3 million recorded in 2016.
Thika also suffered a similar fate, with the current price per acre of Sh18.5 million down 1.6 percent compared to Sh19.4 million in 2016.