Apartment blocks rule the Nairobi property market
9 months ago, 1 Jan 12:18
Realtors invested heavily in development of highrise residential apartments located in upmarket areas in the just-ended year, continuing a trend of demolishing single-dwelling units. A report by the Kenya Bankers Association (KBA) released in November noted that 82.66 per cent of all housing units sold were apartments followed by maisonettes at 10.7 per cent and bungalows at 6.64 per cent. “The rise in the price of apartments compared to bungalows and maisonettes continues to signal an element of the search for affordability by potential homebuyers given the lower cost of construction per unit on the developers’ side that translates to relatively low offer prices,” said KBA director of research and policy Jared Osoro. In the past year, data available from the Nairobi County Government Buildings Approval Department indicate investors put money in highrise apartments but shunned standalone mansions that proved a hard sell due to high prices driven mainly by the cost of land in upmarket areas. KBA research officer David Muriithi said house buyers were keener on reducing cost of houses where unnecessary space such as domestic servant quarters (DSQs) were now a thing of the past in the era of day care centres and nannies. Investment firm Cytonn said real estate investments raked in higher returns than treasury bonds thereby attracting local and foreign funds. The 2017 Cytonn Investments Nairobi Area Metropolitan Land Report named Kilimani, Upperhill and Westlands as the most favoured locations for mixed-use developments, registering the highest capital appreciation that increased at a five-year Compounded Annual Growth Rate (CAGR) of 24.3 per cent. Ridgeways, Kileleshwa and Kilimani were the next favoured spots enjoying a significant growth of 17.7 per cent while low-rise residential areas such as Spring Valley, Kitisuru and Karen witnessed slower growth at a five-year compounded growth of 14.6 per cent, largely comprising bungalows and maisonettes. Cytonn’s regional markets senior manager Johnson Denge said commercial zoning allowed investments in mixed-use real estate highrise developments contributing up to nine per cent in earnings.
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