Rising interest rates and construction costs have led to a rise in Nairobi property prices, particularly detached houses (3.7%) and apartments (1.5%) in Q1 2024 compared to the previous quarter.
Hass Consult’s Property price index for the first quarter of 2024 shows a 5.3% year-on-year increase.
Rental markets slightly improved, with overall asking rents increasing by 0.4% q/q.
Apartments led the increase with 1.4% growth, while detached houses saw a marginal rise of 0.1%. This limited growth reflects the challenging economic climate.
“The rise in asking prices moderated in the first quarter of the year as credit conditions tightened following the increase in the CBK’s base lending rate to 13%, which has had the effect of sweeping liquidity from the market,” said Ms Sakina Hassanali, Head of Development, Consulting and Research at Hass Consult.
Affordability Drives Apartment Demand
The continued rise of the middle class is driving demand for affordable housing options like apartments.
This trend is reflected in the highest year-on-year rental increase being observed in apartments (10.6%).
Detached houses experienced a slight price correction (-0.1%), while semi-detached houses saw a moderate increase (2.9%).
Nyari Estate emerged as the top performer for detached and semi-detached houses, boasting an 8.8% annual price appreciation. This is likely due to its excellent infrastructure and proximity to the CBD.
Conversely, Westlands saw a 1.1% decline, potentially caused by residents seeking more affordable alternatives.
Kileleshwa emerged as the best-performing area for apartments, with a 6.8% annual capital appreciation. This can be attributed to its convenient location near amenities, the CBD, and good road access.
Upperhill, on the other hand, saw a 6.0% price correction, possibly due to residents opting for neighbouring areas.
“Tenants in the rental market considered other factors such as accessibility and convenience when choosing where to let. For this reason, Westlands, which is served by a good road network and has emerged as the most attractive business district in the city, reported a 5.8 per cent increase in asking rent, outperforming all other suburbs,” noted Sakina Hassanali.
Satellite Towns
Athi River led the price surge in satellite towns with a 12.2% annual increase. This is likely due to improved infrastructure, proximity to amenities, and a growing population driven by nearby companies.
Limuru, however, saw a limited increase (2.0%) due to its distance from major business centres and competition from surrounding areas.
For apartments in satellite towns, Thika enjoyed the highest growth (8.8%) due to good infrastructure and population increase.
Kitengela, however, experienced a price correction (-1.5%), likely due to competition from more strategically located and amenity-rich neighbourhoods like Athi River and Mlolongo.
