Landlords in Nairobi raised rents by an average of 3.3 per cent in the second quarter of the year as normalcy and confidence returned to the property market following a difficult 2017.
Realtors HassConsult second quarter property index report shows that rents have risen fastest in Ruaka, Lang’ata, Parklands, Westlands, Limuru and Tigoni.
Gigiri, Ngong and Lavington, on the other hand, led in house price increases.
Total returns on property — which combine rental yield and sales prices— have as a result gone up to 11.4 per cent over the quarter compared to 4.3 per cent in quarter two of 2017.
“Landlords are now confident enough to renew rent escalations, which had been halted over the last year due to uncertainty (in the economy). The biggest beneficiaries are landlords who own units in suburbs and satellite towns that have traditionally been semi-detached house markets,” said HassConsult head of development and research Sakina Hassanali.
For the suburbs, the rental price growth was highest in Langata at 3.7 per cent, followed by Parklands at 3.6 per cent and Westlands at 3.1 per cent. In the satellite towns, the highest increase was in Tigoni at 4.8 per cent, Limuru at 4.4 per cent and Ruaka at 3.9 per cent.
The demand for houses in Nairobi is normally driven by the availability of good transport links, schools, hospitals, good security and reliable water supply.
The increased return was, however, not seen on land prices in Nairobi, with prices remaining depressed in most areas.
On average, the price of land in the Nairobi area rose by a paltry 0.2 per cent during the second quarter, with HassConsult saying the need to clear a backlog of developed units and the effect of the rate cap were to blame.
“Property and land markets will only reach full potential when much-needed capital is reintroduced to the market,” said Ms Hassanali.
There were few pockets of price growth for landowners though, led by Ngong at 4.3 per cent among the satellite towns and Kileleshwa among the suburbs at four per cent.
Other areas with significant growth in a depressed market included Athi River at 3.6 per cent, Limuru, Juja and Tigoni three per cent each, Ridgeways and Ongata Rongai at 2.6 per cent each.