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Economy

Single rooms offer highest returns

Apartment blocks in Huruma, Nairobi County
Apartment blocks in Huruma, Nairobi County. FILE PHOTO | NMG 

Rent for two-bedroom houses rose the slowest over the past seven years as tenants of single-room houses absorbed the steepest rise in changes that have seen the poor suffer most.

Official data shows that rent for two-bedroom bungalows is up 32 per cent to an average of Sh29,210 since 2011 while that for one-room unit shot up 55 per cent to Sh4,310 over the period, according to latest data from Kenya National Bureau of Statistics (KNBS).

This means tenants of two-bedroom units have benefited from slower rent rise while landlords who have put money developing single-room houses have raked in higher returns.

Three-bedroom maisonettes recorded a 34 per cent rise to Sh36,097 in the seven-year period, marking the second slowest growth while rent for two-bedroom flats grew 50 per cent.

The KNBS does not currently track the rent for one-bedroom houses. The rent data means developers of single-room units, popular with low income earners, have gained the most in terms of rate of returns on their investments, especially in major towns. They are followed by investors in two-bedroom flats, then three-bedroom maisonettes while bungalows are bottom.

The majority urban poor population opt for the small units whose charges fit their meagre budgets. Two-bedroom flats also fit within the budgets of the middle class and their locations near or along routes connecting to commercial towns have proved convenient in daily commute. Maisonettes are often located in places farther from town centres and are preferred by the rich while most middle-income commuters opt for two-bedroom units whose lower costs match their budgets.

The KNBS shows that Nairobi’s middle class homes spend the bulk of their monthly income (23.6 per cent) on housing, utilities and cooking gas.

Poor homes spend 18.2 per cent of their income on rent and utilities while rich homes spend 19.8 per cent.

In 2011, the rent for two-bedroom bungalow stood at an average of Sh22,152, two-bedroom flat at Sh13,974, three-bedroom maisonette (Sh27,005) and Sh2,784 for single-rooms.

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