Rental prices across prime property in Nairobi remained flat in the second quarter of the year as landlords sought to retain tenants in a tough economy which has hurt consumer spending power, a new report states.
A quarterly house and rental price index by real estate form HassConsult shows that asking rents across all property in the city’s suburbs and satellite towns rose by a marginal 0.01 percent in the three months to June, compared to an increase of 0.4 percent in the first quarter of the year.
Rent ranks among top expenditure items on household budgets alongside food, energy and transport costs.
The economy is coming off a period of high inflation, which has made consumers sensitive to price changes.
“Property owners are cautious about raising rents to retain tenants amid higher taxes and inflation, which has constrained disposable income,” said Sakina Hassanali, HassConsult’s head of development, consulting, and research.
Among the different categories of housing, semi-detached units recorded rental price contraction of 0.7 percent in the quarter, while detached units and apartments reported increases of 0.03 percent and 0.5 percent respectively.
The biggest fall in rent prices was seen on flats in Upperhill while houses Ongata Rongai had the highest increase at 4.6 percent. In the property sale market, prices rose by a modest one percent in the quarter, down from 2.7 percent in the first quarter of the year.
Satellite towns outperformed the suburbs with an average increase of 2.1 percent compared to a 0.9 percent decrease in the suburbs, with lower average prices in the towns helping fuel demand and affordability for buyers.
The average price of a mid to upper class house in the city stood at Sh36.2 million in June, according to the HassConsult report. “This rise in satellite towns can be attributed to accelerated urbanisation, which has bolstered demand and pushed up asking prices,” said Ms Hassanali.
Although the price of property in the suburbs is higher than in satellite towns, the rental yield is higher indicating that developers in the outlying areas have raised their asking rents at a slower pace, even as their property becomes more expensive to purchase.
In the suburbs, the average yield increased to seven percent by the end of June from 6.9 percent in March. Conversely, rental yields in satellite towns decreased slightly from 4.9 percent in March to 4.8 percent in June.
