- Kiserian in Kajiado County offered Nairobi investors the lowest price for an acre of land even as Upper Hill cemented its position as the most costly location in a year where plot prices rose by 1.69 percent.
- With an average price per acre of land in Kiserian going for Sh7.5 million, the area offers prospective land buyers seeking to build homes in Nairobi’s satellite towns the best bet.
- The price guide is contained in a report by HassConsult Real Estate that lists Upper Hill as the most expensive, with an acre there going for Sh545 million followed by Kilimani at Sh433 million.
Kiserian in Kajiado County offered Nairobi investors the lowest price for an acre of land even as Upper Hill cemented its position as the most costly location in a year where plot prices rose by 1.69 percent.
With an average price per acre of land in Kiserian going for Sh7.5 million, the area offers prospective land buyers seeking to build homes in Nairobi’s satellite towns the best bet.
The price guide is contained in a report by HassConsult Real Estate that lists Upper Hill as the most expensive, with an acre there going for Sh545 million followed by Kilimani at Sh433 million.
The report also reveals that land costs in the city increased by 1.69 percent over the past year while the satellite towns have seen a 5.11 percent rise, suggesting a cooling in prices following a sluggish property market.
However, HassConsult says that returns from land over the past decade have outpaced other asset classes like government bonds and equities.
“The index, which compares Nairobi’s land price movements to other asset classes and commodities, found that the city’s land had outperformed all other asset classes in return on investment,” said HassConsult.
Land prices within the city have increased 638 percent since 2017 while the city’s satellite towns in Kiambu and Kajiado have witnessed a 894 percent price jump over the same period.
The high appetite for property saw coffee plantations in Kiambu cleared to pave way for gated housing estates and shopping centres.
The boom has also been driven by Kenya’s growing middle class who cannot afford property in the capital, HassConsult says. Besides Kiserian, other cheaper locations include Kitengela at Sh12.1 million per acre and Athi River (Sh13.4 million).
Ruaka in Kiambu County had the most expensive land among locations in Nairobi’s satellite towns with an acre going for Sh90.9 million, followed by Kiambu (Sh43 million), Mlolongo (Sh27.2 milliion) and Ruiru (Sh25.6 million. Real estate companies like Cytonn have invested heavily in areas like Rwaka and Ridgeways on Kiambu road, mainly targeting the middle class.
Nairobi’s Karen suburb offers the lowest price for an acre of land among high-end estates. The average price per acre there was Sh62.2 million against Sh84.7 million in Runda and Sh90.9 million in Kitisuru.
By contrast, land in Muthaiga is the most expensive at Sh176.1 million, followed by Spring Valley (Sh168.3 million) and Sh105.8 million in Nyari on Limuru Road.
Given the high land prices in these areas - with the exception of Karen - experts say that for these surburbs to experience a significant increase in prices, zoning regulations need to be relaxed to “allow for more space for people to live and thus more value can be derived from the land”. This is reflected in the cost of land in places like Parklands, Kileleshwa and Lavington where the zoning rules have been relaxed. An acre goes for Sh310 million in Kileleshwa and Sh237 million in Lavington respectively.
Despite the growth in some areas, a slowdown in the property sector is being mirrored in other segments of the economy plagued by reduced profitability, job cuts, freezes in hiring and near stagnant wages.
However, property dealers expect the repeal of the rate cap to spur growth in the sector, prompting a rally in home and land prices.
In 2016, the government limited rates banks can charge customers to four percentage points above the central bank’s benchmark - currently nine percent - saying they were concerned about high rates.
Earlier this month, President Uhuru Kenyatta directed that lawmakers remove the cap on commercial lending rates. MPs will next week start debate on the proposal.
“Repealing the rate cap is expected to result in banks increasing lending to the private sector which will spur the general economy,” says HassConsult.