Nairobi’s satellite towns post double-digit land price gains

Kitengela is one of Nairobi’s satellite towns that recorded land price increases of between 10.7 and 14.2 percent. 

Photo credit: File | Nation Media Group

A majority of Nairobi’s satellite towns recorded double-digit price growth in the year to March 2024, keeping them on track to beat government securities in returns once interest rates go down as per the Central Bank of Kenya (CBK) projection.

The quarter one 2024 land price index compiled by real estate firm HassConsult shows that the price per acre in Ongata Rongai appreciated by 16 percent to Sh27.4 million in the 12 months to March, followed by Syokimau at 15.8 percent to Sh33.7 million.

Kiserian and Mlolongo reported annualised land price increases of 15.5 percent and 15 percent respectively to Sh11.2 million and Sh39.9 million. Ngong, Kitengela, Thika, Ruiru and Juja recorded increases of between 10.7 and 14.2 percent in the period.

These land price gains are now competing favourably against returns in other asset classes, including government securities where annual interest rates touched a high of 18 percent gross of tax, but are now seen to be trending downwards.

The CBK has said that it expects rates have peaked, and has been rejecting expensive bids at both bond and Treasury bill auctions. The 91-day Treasury bill for instance saw its rate fall by a percentage point in last week’s auction, while the April two-year bond whose sale closed on Wednesday saw its effective yield fall to 17.15 percent compared to 17.74 percent in its previous reopening in October 2023.

“Satellite towns are driving the revival of land as a competitive asset class with an average annual growth of over 11 percent. With interest rates projected by the CBK to fall in coming months, the stable price growth seen over the last two years should make land even more attractive as an asset,” said HassConsult head of development, consulting and research Sakina Hassanali.

“Developers have also shown a preference for areas whose prices are lower than the satellite town average of Sh28.8 million, as they keep an eye on overall costs due to higher building input prices.”

The quarterly HassConsult report tracks land price movement in 14 satellite towns and 18 Nairobi suburbs.

In the suburbs, price increases have been more muted compared to satellite towns, with only Langata recording a double-digit gain at 10.1 percent to Sh82.3 million per acre.

The average cost per acre in the suburbs, which rose to Sh203.7 million by the end of March, remains considerably higher compared to the Sh28.8 million average for satellite towns, leaving some areas of the city only accessible to a few well-heeled developers.

Upperhill and Westlands remained the most expensive locations in the city in terms of land prices at an average of Sh480.9 million and Sh465.8 million per acre respectively.

Parklands (Sh410.3 million) and Kilimani (Sh403.2 million) also averaged above the Sh400 million mark. On average, the price of land in the suburbs went up by 4.9 percent over the one year, led by Langata and Loresho, whose price rose by 9.3 percent to Sh108.7 million per acre.

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