Nairobi tops cities in high residential prices growth

Mixed-use developments in Westlands, Nairobi. [Wilberforce Okwiri, Standard]

Nairobi has been ranked among 45 cities in the world which recorded the largest 12-month growth in residential prices.

The Knight Frank Prime Global Cities Index, which tracks movement in the top five per cent of residential prices across 45 global cities, places Nairobi at position 29.

It is the only city in Africa to make the cut.

The quarter three (Q3) report also indicates that Nairobi, which posted a 2.9 percentage 12-month change in residential prices, recorded a 0.4 per cent six-month (quarter one to quarter three) and a 0.5 per cent three-month change (quarter two (Q2) to quarter 3 (Q3).

Globally, prime price growth dipped for the second consecutive quarter in Q3 2022, Knight Frank said.

The index recorded average annual growth of 7.5 per cent in the third quarter of 2022, down from a peak of 10 per cent in the first quarter of 2022.

"However, at 7.5 per cent, annual growth still sits above the index's average five-year growth rate of 4.4 per cent, and the number of cities registering year-on-year price falls has only shifted from six last quarter to seven this quarter," Knight Frank said.

"But dig deeper and the quarterly data reveals a marked slowdown. Of the 45 cities tracked, 19 saw prime prices decline between June and September 2022, up from seven in the first quarter of 2022."

Dubai, with an incredible 88.8 per cent 12-month change, leads the list with Miami (30.8 per cent) and Tokyo (17 per cent) second and third respectively.

Expensive property

Prime, Knight Frank says, is defined as the most desirable and expensive property in a location, defined as the top five per cent of each market by value.

In the period under review, the average annual growth dropped from 10 per cent in the first quarter of 2022 to 7.5 per cent in the third quarter.

The real estate company says a lack of supply and well-capitalised lenders will support prime prices in most markets into 2023.

"However, the transition out of a sustained period of low lending rates will lead to pinch points in some markets, particularly amongst highly-leveraged prime landlords, potentially adding to stock levels in some cities," Knight Frank says.

The report noted that the strong performance of some European cities is tied to seasonal demand over the summer but also a degree of safe haven capital flight.

"Zurich (10.7 per cent), Edinburgh (9.9 per cent), Berlin (9.4 per cent), Dublin (8.6 per cent) and Madrid (5.6 per cent) have all risen the rankings in the last 12 months despite the drop in sentiment and the slowdown in the Eurozone's economy," said Knight Frank.