Karen's growth as a commercial hub is slowly impacting rent prices in the adjacent residential hubs of Ngong and Lang'ata, research by HassConsult shows.
These price changes are also impacting Ongata Rongai, a major satellite town in Kajiado County. All three towns have proximity to Karen.
Findings by property firm HassConsult, show Ngong Town and Ongata Rongai posting strong rental rates of 17.6 per cent and 22 per cent increase.
According to the Hass property price indices for the second quarter of 2023, average property rental pricing went up marginally by 0.1 per cent.
This, the realtor says, was backed up by renewed demand for rental apartments which sustained their growth trend on affordability going up by 1.8 per cent. This is as demand for houses reduced by 0.5 per cent in the same period.
But while the market slowed down for sale and rental pricing with only pockets of growth, the realtor notes that areas like Ngong, Langata and Ongata Rongai were bullish in their prices.
"Sale prices for houses in Langata and Ngong went up 12.8 per cent and 18 per cent respectively in the year running up to June 2023 while apartment prices went up by 15.5 per cent and 6.8 per cent in the same period," the HassConsult index shows.
Proximity to Karen
The realtor notes that Ngong and Lang'ata expanding infrastructure upgrades as well as proximity to Karen is contributing to their gradual growth as a residential hub.
This has then affected Ngong Town and Ongata Rongai growth rates with the index reporting strong rental growth rates of 17.6 per cent for Ngong Town in the last year and 22 per cent for Ongata Rongai.
Karen is noted to host only high-value, low-density housing but has begun to be established as a commercial centre. This then affects the growth of the surrounding suburbs to rouse the adjacent areas for middle-market housing.
"The subsequent effect of the expansion of Ngong Road has opened Karen up to a super suburb status whose growth as a commercial node for the surrounding towns is having spillover pricing effects," said Sakina Hassanali, head of development, consulting and research at HassConsult.
As a result, Ngong Town is also reported to have witnessed bullish growth in land prices which increased 4.7 per cent in the quarter and 20.7 per cent over the last year which is four times the rate of the increase in an average satellite town. This growth defied the prevailing economic conditions.
The HassConsult index indicates that the Ngong-Kiserian-Isinya Road construction, which was formerly a rough road, might have played a role. The road now seamlessly connects the three towns hence residents of Ngong have less traffic to contend with when travelling to and from work.
The Expansion of the Ngong- Kibiko-Suswa Bypass opening up Kibiko area has also had a role.
The Hass Land Index for the second quarter of 2023 shows land prices in Nairobi's 18 suburbs stagnated as general demand slowed down in the areas. This is a decline of 0.1 per cent in the quarter but growing 1.2 per cent in the year. Spring Valley, Donholm, Loresho and Lang'ata recorded respective increases of 2.1 per cent, 2.2 per cent, 2.5 per cent and 3.9 per cent. Land price increases, the realtor says, were witnessed in city suburbs that had low rigidity of traditionally allowable development densities.
Land prices within satellite towns over the quarter, the index states, were also subdued with minimal increases of just 1.2 per cent and 5.1 per cent in the year.
Satellite town
Thika Town was the satellite town with the highest quarterly increase in the period of 5.84 per cent while Ngong had the highest over the year of 20.7 per cent. Juja had the lowest quarterly increase of -4.37 per cent while Ongata Rongai had the lowest quarterly increase of -13.47 per cent.
Langata is the suburb with the highest quarterly increase for land prices of 3.85 per cent while the annual(increase) goes to Spring Valley 17.33 per cent. Suburb with the lowest quarterly increase is Nyari with negative 1.79 per cent with Upper Hill reporting the lowest annual increase of negative 3.26 per cent.
"Land pricing is a function of its development potential. Therefore, land in areas with strict development density guidelines tends to have a price ceiling while (land) in areas that are subject to less rigidity around the densities tends to increase in pricing in tandem with the approved density."
