Rents in Nairobi have shot 4.25-fold in 10years
By Steve UMIDHA
A surge in demand pushed Kenya’s rental market to its snuggest level in a decade last year, with the vacancy rate in purpose-built apartments rising 4.25-fold since 2001, new industry numbers have shown.
Those were some of the main takeaways from the Hass House Price Index statistics for the last quarter of 2022, whose findings also showed that house prices in Nairobi and its environs, had significantly shot up to 3 times in the last 10 years – which is faster than apartment prices.
It attributed those rises to “limited density allowances in high-end villa suburbs” and deranged city planning.
“City planning only permits the building of one or two houses per acre in a majority of the city’s townhouse suburbs including but not limited to Muthaiga, Gigiri, Nyari, Kitisuru, Spring Valley, Loresho, Ridgeways, Runda, and Karen –leaving an enormous part of the city locked away for only a small fraction of its residents who can afford homes of an average price of 80 million Kenya Shilling,” said Sakina Hassanali, Head of Development Consulting and Research at the firm.
Hassanali further noted that house pricing in these areas had profited from house price appreciation due to strained supply caused by planning laws.
“While apartment prices have increased by 22 percent on average in the last decade, houses have soared 40 percent in the same time period – almost twice as much.”
The average rental for a property, according to the realtor, has risen from Sh38, 516 in December 2000 to Sh163, 683 in December 2022, while the average rent for a 4 to a 6-bedroom property is currently retailing at an average price range of Sh237, 396.
Similarly, the average rent for a 1-3 bedroom property is retailing in the region of Sh84, 709, depending on the locality and property designs, and surrounding features.
Comparable increases were witnessed in home owning segment, where the average value for property has gone from 7.1 million in December 2000 to 34.1 million in December 2022, while the average value for a 4-6 bedroom property is currently going to Sh38.3 million, compared to 12.3 million price cap for an average value of a 1-3 bedroom property.
“In 2001, apartments took up 45.3 percent of the market, semi-detached houses took up 20.5 percent of the market and detached houses took up 34.2 percent of the market. In December 2021 however, apartments took up 59.8 percent of the market, semi-detached houses took up 30.3 percent of the market and detached houses took up 9.9 percent of the market,” reads part of the survey’s outcome.
The sluggish movement in rental prices across most markets, according to the report, was reflective of the rise in the cost of living in 2022 as well as global inflationary pressures that have worked to reduce real income.
Indeed, property sale prices in three months to December last year recorded a 2.2 percent quarterly price drop bringing the average annual property price gains to just 4.8 percent over 2022.
Simply put, tough economic challenges seen in the last three years, and predominantly in 2022 which coincided with the electioneering period, led to unprecedented delays in the pipeline of new rentals, forcing a number of projects to stall.
The Russian-Ukraine – related supply chain disruptions combined with shortages of raw materials have been cited as the major cause of the widespread construction delays in the country, which has led to a classic case of low demand and short supply driving up prices.
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