Land prices in Nairobi satellite towns surge on construction of by-passes

-Average land value had shot up from Sh2.4m in Dec 2007 to Sh15.8m in March 2016
-Prices in 18 Nairobi suburbs increased by 2.5 pc
-Muthaiga still the best performing suburb with a growth of 13.1pc in asking prices compared to Kitisuru’s 0.3pc drop
-Upperhill most expensive land at Sh517m per acre

By Remie Umidha
The value of land in Nairobi’s satellite towns has increased by 8.1 per cent in the second quarter of 2016 and 15.6 per cent over the year – marking the industry’s first double digit growth in two years, says latest property index by HassConsult.
Land prices in satellite towns situated along the Northern, Southern, Eastern and the proposed Western by-passes have sparked a rush for property in the areas – leading to a sharp increase in asking prices.
HassConsult head of research and marketing Sakina Hassanali said that the rise in the satellite town like Ruiru, Ruaka and Limuru was being driven by infrastructure developments in those areas.
“We attribute the strong growth of asking prices in these areas to road construction and in particular the bypasses that are circling the city which has seen land owners ask for higher prices on anticipation that the demand will increase,” said Hassanali.
The Western bypass, according to the report, has sparked interest in the nearby towns in this quarter, “where we saw land owners hike prices following the announcement of the construction of the last of the bypasses set to begin towards the end of the year.
The planned construction of the Sh17.3 billion Western by-pass was finalised last month and is part of the system of ring roads around Nairobi aimed at dispersing traffic away from the city centre. The project is being funded by a concessionary loan from the government of China.
The report, released Monday forecasts land prices will swell upon the completion of the highway.
Upperhill, Ruaka and Kiambu continue to be the host spots for land buyers and are currently priced at Sh517million, Sh68.3million and Sh38.7million for an asking price of an acre respectively.
Meanwhile, overall asking prices for rents in Nairobi recorded a flat-rate growth compared to the last quarter with detached houses registering the highest increase in the segment at 5.2 per cent over the period.
House price gains equally recorded a strong growth despite the slowdown in economic growth, “but can be catalysed if commercial banks reduce interest rates for developers, contractors and homeowners,” she said, adding that the industry could further experience growth if the move by the CBK in reducing its base lending rate in May, ‘should now nudge banks to lower their rates in turn.’