Nairobi’s property market continues to show resilience, with land prices increasing across both suburbs and satellite towns in the first quarter of 2024.
According to Hass Property Price Index for the second quarter of 2024, suburban land prices rose by an average of 1.3% per acre, while satellite town prices increased by 3.03%.
On an annual basis, suburban land values appreciated by 5%, compared to a more substantial 11.2% increase in satellite towns.
“Satellite towns are driving the revival of land as a competitive asset class with an average annual growth of over 10%. With interest rates projected by the Central Bank of Kenya to fall in coming months, the stable price growth seen over the last two years should make the land even more attractive as an asset,” said Ms Sakina Hassanali, Head of Development, Consulting and Research at Hass Consult.
Lavington and Spring Valley led suburban price growth at 4% and 3.8% respectively, while Kileleshwa experienced a marginal decline of 0.1%.
The average suburban land price has surpassed the KES 200 million mark, reaching KES 203.7 million per acre.
Satellite towns, particularly Kiserian, Limuru, and Ongata Rongai, with quarterly price gains of 9.4%, 8.4%, and 7.8% respectively, are driving the market. These areas have seen annual growth exceeding 10%, positioning them as competitive investment alternatives to government Treasury Bills.
Hass Consult’s Property Price Index for the second quarter of 2024 indicates a modest 1% increase in overall property sales prices across Nairobi. While this is slower than the previous quarter’s 2.7%, it marks the eighth consecutive period of growth.
Despite higher interest rates and a stronger shilling, the property market remains stable. However, reduced market liquidity due to higher interest rates has dampened demand.
“While higher interest rates on mortgages don’t have a significant impact on market-wide property price movements due to the low mortgage participation in the country, the rise in rates has the effect of reducing market liquidity in general resulting in a dampening of demand. So far, the property market has shown resilience with price stability still being witnessed across most areas,” said Hassanali.
Satellite towns continue to outperform suburbs, with a 2.1% price increase compared to a 0.9% decrease in suburban prices. This is attributed to accelerated urbanization driving demand.
Rental prices saw a negligible increase of 0.01% in the quarter, as property owners exercised caution due to higher taxes and inflation.
Suburban rental yields improved from 6.9% to 7%, while satellite town yields slightly decreased from 4.9% to 4.8%.
