Land Market remain depressed in Nairobi and suburbs
Land prices across Nairobi and satellite towns have remained depressed even as developers take advantage of renewed confidence in the housing market.
The Hass Property Index research shows that land prices in Nairobi and satellite towns increased by 0.23 percent and 0.5 percent respectively over the quarter compared to a 2.5 percent and 8.1 percent increase respectively recorded in a similar second quarter of 2016, just before the introduction of the interest rate caps.
The slowdown of credit in the market coupled with dwindling purchasing power on tight liquidity witnessed in the city saw an increase in distressed assets on the market further hampering land price inflation.
Despite the depressed market due to tight liquidity as a result of introduction of Interest rate caps there are suburbs that defied the economic conditions and led to price increase in areas such as Ngong with 4.25 percent and Kileleshwa with 3.96 percent.
“Ngong was the top performing among satellite towns at 4.25 percent increase in the quarter. Investors are warming up to Ngong town which is set to host a passenger station for the Standard Gauge Railways. Ongata Rongai, another satellite town that will have a passenger station, has similarly benefited from investor interest with prices increasing by 2.6 percent over the same period,” Said Hass consult’s Head of Development Consulting and Research Ms. Sakina Hassanali.
Ms. Sakina also stated that Kileleshwa was the best performing suburb over the last quarter with prices increasing by 3.96 percent, a correction after a series of price drops over six consecutive month’s in2017.
Hass consult has also disclosed the Hass Property price indices for the second quarter of 2018 showing that total returns on property comprising of rental yields and property price has tripled over the quarter upheld by rental increases in the semi-detached markets.
“Landlords have agreed to renew rent escalations which had been halted over the last year,” said Ms. Sakina Hassanali. She added. “It is clear that there is renewed confidence in the market but we are not yet out of the woods as the interest rate caps which have affected liquidity in the market still pose a challenge.”
She also noted that Kitisuru led the pack with house rents increasing by 2.7 percent over quarter while Langata posted the highest rent price increase in the apartment segment at 3.7 percent in Nairobi, as Ngong town in satellite towns saw prices rise across the board with house prices increasing by5.8 percent and apartment prices up to 6.9 percent over the quarter.
By Ordiria Mutheu/Anne Wangui