Property prices in Nairobi and its satellite towns defied tough economic conditions in the fourth quarter of 2023 to rise at the highest pace in seven years.
Property price analysis done by realtor HassConsult shows that house prices across all segments rose by 4.1 percent in the three months to December 2023, a level last seen in the first quarter of 2016 when prices went up by 4.2 percent.
The appreciation, which marked a sharp reversal from the decline of 1.1 percent seen in quarter three (to September 2023), was largely on the back of a weaker shilling raising the attractiveness of the local property market to external investors.
A weaker shilling lowers the entry barrier for foreigners looking to buy into Kenyan property, given that they need less of their hard currency to pay for local units.
Those exiting would however face exchange losses, but because investments in the sector tend to be long term, they have time to ride out the weakness of the shilling.
“Although the weaker currency raises input costs for developers on ongoing and future projects, it makes the Kenyan property market attractive to foreign investment, buoying asking prices due to augmented demand from these investors,” said HassConsult Head of Development Consulting and Research Sakina Hassanali.
“The property market offered a total return (capital gains plus rental yield) of 8.3 percent in the fourth quarter of the year, illustrating renewed resilience in the face of the challenging conditions that also included high-interest rates.”
In the quarter, all 18 Nairobi suburbs surveyed by HassConsult recorded higher buying prices, led by Ridgeways (4.9 percent), Langata and Spring Valley (4.4 percent) and Loresho (3.9 percent).
In the satellite towns, Juja, Kitengela and Athi River were top performers in sales prices during the quarter with gains of 4.6 percent, 4.4 percent and 3.8 percent respectively.
In the rental market, satellite towns offered higher returns to developers, indicating more robust demand on account of affordability and improved access infrastructure.
The fastest growing rental asking prices were found in Athi River at 7.5 percent in the quarter, followed by Kitengela and Ongata Rongai at 5.6 percent each, and Tigoni at 5.1 percent.
In the suburbs, Kilimani offered the fastest-growing rental prices at 3.7 percent, followed by Runda at 3.3 percent.
The rebound in property returns offers hope that the sector is coming out of the slump that was induced by the Covid-19 pandemic, which saw buyers pause activity due to economic uncertainty, and landlords struggle to fill units as thousands of Kenyans lost their jobs on reduced economic activity.
Similarly, developers cut down the construction of new units on concerns about the reduced uptake of houses.
