Westlands – Parklands was the best performing node, recording an average rental yield of 6.1%, according to the Nairobi Metropolitan Serviced Apartments 2020 report released by Cytonn Real Estate.
The performance has been attributed to the proximity to business nodes such as Kilimani, Nairobi Central Business District, and Upper Hill.
In addition, the availability of amenities such as the Westgate Mall and Sarit Centre, ease of accessibility and proximity to the main airports that is Jomo Kenyatta International Airport (JKIA) and Wilson Airport.
Kilimani was the second-best performing node with average rental yields of 4.8% compared to the market average of 4.0%.
This is however a decline of 4.7% points attributed to a 31.6% decline in occupancy rates and 20.5% correction in the monthly charges per SQM.
Thika Road (Muthaiga North, Mirema and Garden Estate) recorded the lowest rental yield at 2.0%.
This was attributed to the relatively low charge rates for apartments within the area, given its unpopularity, due to lack of modern and quality serviced apartments in the area, the significant distance from main commercial zones, in addition to security concerns as the area is not mapped within the UN Blue Zone.
The report found that housing units recorded an average rental yield of 4.0% in 2020. This was 3.6% points lower than the 7.6% recorded in 2019.
“This is attributed to declines in monthly charges per SQM and occupancies from Ksh 2,806 to Ksh. 2,445 and from 79.4% to 48.0%, respectively,” the report reads.
The report covers the state of the serviced apartments market through looking into the drivers, challenges facing the sector, current and incoming supply, performance, and concludes by pointing out the investment opportunity.
The decline in performance is attributable to subdued demand for hospitality facilities and services due to the COVID-19 pandemic.