Land prices in Nairobi recover to pre-Covid levels

Land prices in Nairobi and its environs are slowly recovering from the effects of the economic slump occasioned by the Covid-19 pandemic.

The latest data by a real estate management firm shows the recovery is favouring satellite towns, with a slight increase in prices being recorded in Nairobi.

Hass Consult's third-quarter data shows satellite towns recorded a 2.5 per cent increase in prices. In the Nairobi area, the increase was 0.3 per cent.

The firm noted that land prices in satellite areas are now back to the pre-Covid-19 period. “The last time towns recorded similar price increases was in the third quarter of 2019 or two years ago,” says the update.

The data is from an analysis of prices in 18 suburb areas in Nairobi and 14 satellite areas. Among the satellite areas, three recorded a price drop in the quarter.

In Limuru and Ngong, prices dropped by 0.1 per cent, while Ruaka registered a 0.2 per cent drop.

Among the suburbs, four areas had a price drop of between 0.3 and 1.3 per cent. Loresho had the highest drop of 1.3 per cent followed by Westlands 0.7, Riverside 0.6, Kilimani 0.5 and Lavington 0.3.

Of the 18 suburbs, Spring Valley had the highest jump of 2.2 per cent, followed by Parklands with 1.3 per cent. Kiserian led the satellites with 5.3 per cent increase, followed by Kiambu at 4.8 per cent. Thika had the least jump of 0.9 per cent. 

“Last year, at the height of the pandemic, we saw satellite towns record drops in tandem with Nairobi suburbs due to disruption to the economy and the accompanying uncertainty, but the gradual opening up has triggered investors back to the towns at a faster rate than the suburbs,” said Sakina Hassanali, Head of Development Consulting and Research.

The data notes the drop of Ruaka land prices “indicating that developer demand is waning on account of a wait-and see-approach pending uptake of major developments and a lack of clarity on whether major roads will change the neighbouring landscape.”

Ruaka and Donholm are some of the most sought after areas by developers for rental income. A recent report by EFG Hermes, a financial institution, showed land in these areas going for almost Sh100 million more compared to some of the suburbs in the city.

“There are many developments in the area (Ruaka), both complete and upcoming, and developers normally will wait for stocks of units to be taken up before they can continue with their plans, which has an effect on prices,” said Hassanali.

The slight slump in Ruaka, added Hassanali, also has a relation to the ongoing construction of the Western Bypass. “It is still not clear if completion of the Western Bypass will open up adjacent areas, which has the potential to create new hot spots.”

The data shows Spring Valley as the best performing suburb with prices increasing by 2.2 per cent over the quarter - indicating huge demand in the area.

This is despite the area having been only rezoned only a few years ago, from a purely residential area to a commercial and high-rise apartment area.

“On an annual basis Nyari posted the highest price rise at 7.18 per cent,” says Hass Consult.

“Loresho was at the tail end over the quarter at - 1.32 per cent while Riverside saw prices drop by 5.1 per cent on an annual basis.”

The analysis shows the average value for land has appreciated from Sh30.3 million in December 2007 to Sh190.5 million in September.

It shows that if you had invested Sh1 million in Nairobi’s satellite towns at the end of 2007, today, it would fetch Sh9.47 million. The Sh1 million would net Sh6.29 million if it was invested in land in Nairobi suburbs and Sh2.38 million if invested in property, according to the Hass Sales Composite Index.

The returns will be Sh3.07 million if it was invested in bonds and Sh1.47 million if invested in savings. Investment in equities would fetch Sh0.38 million.

Business
Premium Financial hardships dampen Easter celebrations among Kenyans
By Brian Ngugi 12 mins ago
Business
Premium Looming crisis as top lenders stare at Sh500b in bad loans
Business
Premium Water PS Korir put on the spot over Sh14m dam land
Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam