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Home Business

Investor demand push land prices in Nairobi towns to all time high

The Exchange by The Exchange
August 4, 2022
in Africa, Business, Kenya
Reading Time: 4 mins read
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Overall land prices in the satellite towns improved by 4.1 per cent over the second quarter of the year

  • Land prices in Nairobi’s satellite towns hit all-time highs in the second quarter of 2022 because of continued investor demand for new land for development and investment
  • Overall land prices in the satellite towns improved by 4.1 per cent over the quarter, with all 14 suburbs tracked by the index posting positive returns
  • Tigoni emerged as the best performing town with prices increasing by 6.65 per cent over the quarter, while Juja recorded a 20.91 per cent annual increase

Land prices in Nairobi’s satellite towns hit all-time highs in the second quarter of 2022, a new report by property experts HassConsult has found.

Also read: Boost to Kenya’s exports as Kakuzi starts selling Avocado to China

The company attributed the performance to continuous investor demand for new land for development and investment.

Overall land prices in the satellite towns improved by 4.1 per cent over the quarter, with all 14 suburbs tracked by the index posting positive returns. Limuru and Athi River were the only towns whose prices did not touch historic highs over the quarter.

Tigoni emerged as the best performing town with prices increasing by 6.65 per cent over the quarter, while Juja recorded a 20.91 per cent annual increase.

HassConsult noted that demand is being driven by emerging opportunities in retail, manufacturing, and logistics needed to serve the rapidly urbanising towns and the capital city.

Investments in infrastructure over the last few years have further encouraged these new opportunities.

“We have witnessed a resurgence in land activity in the satellite towns attributed to an expansion of services in the wider Nairobi area, owing to infrastructure upgrades, a growing population and the influx of international interests looking to create a regional base in Nairobi,” said Sakina Hassanali, Head of Development Consulting and Research at HassConsult.

In Nairobi, land prices exhibited stability with a 0.17 per cent growth, with only high-end, low-density suburbs Loresho, Spring Valley and Nyari showing optimistic growth at 3.5, 3.4 and 2.1 per cent, respectively.

Also read: First UK-funded anti-terrorism unit opened in Kenya

The report’s finding was in line with Cytonn Investments’ finding that the average selling prices for land in the Nairobi Metropolitan Area appreciated by 3.1 per cent.

According to the report, the performance was mainly attributed to several factors, including a high population and urbanisation growth rates driving demand for land.

It is also on account of improved development of infrastructures such as roads, railways, water and sewer lines, and increased construction activities, particularly in the residential and infrastructure sectors, thus fuelling demand for land.

Land for sale poster.

Meanwhile, a report by the Kenya National Bureau of Statistics (KNBS) recently found that the real estate sector grew by 6.1 per cent in the first quarter of the year, representing a 0.6 per cent points decline from the 6.7 per cent growth that was recorded in Q1’2021.

The report also found that the construction sector grew by 6.4 per cent in Q1’2022 to mark a 0.4 per cent points decline from the 6.8 per cent growth that was realised in the first quarter of 2021.

Commenting on the finding, Cytonn Investments said they expect Kenya’s property market to continue recording development activities in its various sectors.

Also read: Qatari fund buys Crowne Plaza Nairobi

The growth would be driven by several factors, including rapid construction activities, particularly in the residential and infrastructure sectors.

Others are the ongoing aggressive expansion in the retail sector, increasing investor confidence in the hospitality sector, and improving demand for development land.

“Conversely, oversupply in select Real Estate sectors, coupled with the high construction costs, is expected to weigh down the optimum performance of the sector,” the investment firm noted.

In a separate report, The Exchange Africa reported that land prices in Nairobi’s suburbs and towns had maintained a mild upward growth in the fourth quarter of 2021.

At the time, HassConsult indicated that prices in the suburbs increased by 0.34 per cent over the quarter, while in the satellite towns, growth stood at 1.4 per cent.

The report indicated that the consistent increase in land price reflected the general economic recovery that was witnessed during the year.

HassConsult noted that the Kilimani suburb continued to cool as investors went slow because of uncertainty about whether the present infrastructure will support the new wave of developments the area is attracting, thus weakening its appeal.

Hassanali said that a few years ago, it was the exception for a residential building to have a lift, but today it is the norm.

Also read: Kenya set for first miraa consignment to leave for Somalia

She added that the new developments are high-density units, including studio apartments, which shift from the spacious apartments and detached houses that characterised the suburb a decade ago.

“It is not clear if the present infrastructure will adequately cater for all stock coming through,” she said.

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Source: The Exchange
Tags: BusinessCytonn InvestmentsdevelopmentHassConsultinvestmentInvestment firmInvestor demand push land prices in Nairobi towns to all time highKenyaland pricesLimuru and Athi RiverLoreshoNyarirailwaysroadsSakina Hassanalisewer linesSpring Valleyurbanisationwaterкенияكينياケニア肯尼亚
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The Exchange

The Exchange

News analysis and comment from the The Exchange, a leading publication providing economic news and analysis on the capital markets of Africa, with a specific interest in Kenya, Uganda, Tanzania, Rwanda, Burundi, Ethiopia and Congo. We provide features in banking, capital markets, energy, mining, manufacturing and industrial development.

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