The property market in Kenya remained stable even as uncertainty grew towards the end of the first quarter before it was disrupted by the Covid-19 pandemic.
Data from Hass House Price Index first-quarter report, reveals that property prices mildly edged up by 0.9 percent over the quarter with detached and semi-detached houses showing resilience with slight increases of 1.3 percent and 0.9 percent respectively.
However, apartment prices recorded a slight decline of 0.4 percent over the quarter continuing a period of price stagnation bringing the total annual decline to 2.0 percent.
Sakina Hassanali, Head of Development, Consulting, and Research, says the current figures, however, don’t capture the full impact of Covid-19 on the property market.
“It is important to note that Kenya recorded the first case of COVID-19 towards the end of the quarter and therefore, the real effects of the pandemic will begin to emerge from the second quarter. Globally the pandemic has caused markets, across all asset classes, to perform poorly but the extent of this effect on our local market will depend on how we manage the COVID-19 pandemic,” said Ms. Hassanali.
Apartments still preferred
During the quarter, apartments recorded the strongest growth over the quarter with asking rents at 2.1 percent, followed by detached houses at 1.7 percent and semi-detached houses at 0.9 percent.
Apartments similarly recorded the strongest growth in rents at 2.9 percent against the overall property rents a slight drop of 0.7 percent.
Apartment rental prices in Nairobi suburbs dropped in Kileleshwa, Lang’ata, Riverside, Upperhill, and Westlands, however, they stagnated in Lavington, Kilimani and Parklands.
According to the report, the rise in rents for apartments has led to the increase in rental yields in the category to 7.19 percent by end-March 2020 compared to rental yields of 6.76 percent recorded in the same period in 2019.
Kenya’s property market has significantly outperformed the NSE-20 in the last 5 years, with Ksh. 100 invested in the stock market in Q1. 2015 returning KSh 40 in Q1. 2020 while the same invested in property would return Ksh. 122 in the same time frame.