The Nairobi Metropolitan Area serviced apartment sector posted strong performance growth at 80% occupancy rate in 2018, compared to 72% recorded in 2017, according to research from Cytonn Investments.
Cytonn’s analysis of the serviced apartments market performance in 2018, “Overall, serviced apartments recorded improved performance with the average rental yield coming in at 7.4%, which is 2.1% points higher than 5.3% recorded in 2017.”
Other factors included the stable political environment and improved security, making Nairobi an ideal destination for both business and holiday travelers.
Kilimani recorded the highest rental yields at 10.9%, and this we attribute to increased demand for accommodation in the area, supported by the proximity to key amenities such as the Jomo Kenyatta International Airport, the Nairobi CBD and business nodes such as Westlands and Upperhill, and the good transport network thus ease of accessibility.
Thika Road node (Muthaiga North, Mirema and Garden Estate) recorded the lowest rental yield at 4.4%, and this we attribute to its unpopularity, given the distance from main commercial zones, the lack of modern and quality serviced apartments, in addition to not being mapped within the UN Blue Zone thus not attractive to expatriates due to security concerns
These are fully furnished apartments that provide hotel-like resources such as housekeeping, room service, fitness centres, and restaurants.
They have home comforts such as a personal kitchenette, a living room and a dining room. Serviced apartments, unlike hotel rooms, bear close resemblance to apartment-style living and are therefore preferred by guests who want a homely feel or who travel as families.
Demand for serviced apartments has been on the rise and thus they record relatively high occupancy rates of above 70.0%, compared to hotels in Nairobi at 35.5%, according to Kenya National Bureau of Statistics Statistical Abstract 2018 attributed to the large number of international guests who stay for more than 2-weeks in the country.
According to the KNBS statistics, while 43.2% of international visitors in 2017 stayed for less than 14-days, 56.8% of the international guests to Kenya in 2017, stayed for at least 15-days.
The concept of serviced apartments has continued to become increasingly popular in the market, with the Nairobi Metropolitan Area having approximately 3,414 serviced apartments as at 2015, and an additional 1,174 set to be complete by 2020.
According to Cytonn, currently, there are at least 1,189 apartments in the development pipeline set for completion by 2020, with most being constructed in Westlands and Kilimani.