Juja leads Nairobi satellite towns in land price growth

A view of Juja town, Kiambu County. 

Photo credit: File | Nation Media Group

Land prices in Juja grew at the fastest pace among Nairobi’s suburbs and satellite towns in the year to June 2024, highlighting the growing demand for affordable land by commercial developers.

The latest land price index by realtor HassConsult shows that the cost of an acre in Juja rose by 20.1 percent in the 12-month period to Sh21.7 million, or Sh5.4 million for a quarter acre plot.

Juja led a number of Nairobi satellite towns with double digit land price growth in the period, outstripping the appreciation in suburbs closer to the city whose high prices per acre limit their potential for more gains.

The HassConsult survey covered 14 satellite towns, out of which 11 had double digit percentage price growth. The average price growth in these towns stood at 12.3 percent, the HassConsult data showed.

Kiserian and Syokimau followed Juja with price gains of 15.3 and 15.2 percent respectively, while Ruaka, Ruiru and Ongata Rongai recorded growth of 14.3, 14.1 and 14 percent respectively.

On a quarterly basis, price growth in the outlying towns stood at 2.2 percent, down from 3.03 percent in the first quarter of the year, showing that some of the price hotspots such as Ngong and Ongata Rongai were cooling off as investors sought better value elsewhere.

“The increase in the cost of credit and that of building inputs has negatively affected real returns for developers, limiting the propensity to absorb higher land costs in areas with lower purchasing power,” said Sakina Hassanali, head of development consulting and research at HassConsult.

“Ngong and Ongata Rongai, which have had some of the fastest growing land prices over the last three years, were eclipsed by gains in Ruiru, Syokimau and Limuru in the quarter.”

The annual gains have now positioned land competitively in terms of returns compared to other asset classes in the economy.

The 364-day Treasury bill is paying interest at 16.9 percent, gross of 15 percent withholding tax, while the year to date growth in investor wealth at the Nairobi Securities Exchange (NSE) stands at 15.5 percent or Sh223 billion.

Longer dated Treasury bonds are meanwhile paying interest of between 16 and 18.5 percent, with their withholding tax on interest standing at either 10 and 15 percent, depending on duration.

Land price growth in the city’s 18 suburbs is, however, lower compared to the satellite towns. The average price per acre in these areas rose by 6.9 percent to Sh207.4 million by the end of June, with the growth in the second quarter of this year standing at 1.8 percent.

Spring Valley (11.9 percent) and Lavington (10.3 percent) led the city in annual price growth, while the highest quarterly jump was in Spring Valley at 5.3 percent.

There was also renewed growth in the price of land in Upperhill, which remains Nairobi’s costliest location to buy land with an average acre price of Sh499.9 million.

HassConsult said the 3.9 percent price growth in the area indicates that demand for high grade office space is picking up after being subdued since the Covid-19 period, with developers positioning themselves for new developments in the area.

“The resurgence of land price in Upper Hill, which posted its fastest quarterly gain since the fourth quarter of 2014 underpins the uptake of remaining current grade A office space formerly oversupplied, as well as its recent positioning for successful residential real estate,” said Ms Hassanali.

The average land in Upper Hill hit its peak of Sh560 million in June 2018, with Ms Hassanali saying the recent surge signals that there is room for valuation gains as demand for commercial and residential real estate in the area gains traction.

Westlands and Parklands, which also have a mix of commercial and residential developments, have the second and third priciest land prices in the city at Sh472.4 million and Sh419.9 million respectively. Their prices went up by 1.4 percent and 2.3 percent in the second quarter of the year.

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