Housing prices in some of Nairobi’s affluent suburbs including Runda and Kitisuru have dropped significantly in the past one year, a land index report by Hass Consultants has established.
According to a quarterly report published by the real estate firm, land investors in suburbs including Runda and Kitisuru have had to cut prices due to changes in the market.
The report indicated that houses in Runda fell by a rate of 10.9% to reflect a trend where real estate investments in Nairobi’s suburbs have continued to cede ground to those in satellite towns.
In addition, Hass reported that real estate developers in Nairobi’s Kitisuru cut house prices by 9.5% while in Westlands house prices fell by 9.1% over the last one year.
Other suburbs where house prices fell include Ridgeways (5.9%), Loresho (3.9%), and Lavington (3.1%).
Further, the report indicated that apartment prices in some of Nairobi’s suburbs registered significant drops. Among the suburbs with notable drops include Upper Hill where apartment prices dropped by 12.7%, Riverside with a 10.6% fall, and Westlands with a drop of 1.8%.
Other suburbs other than Runda
However, Langa’ta has continued to fair well as far as the real estate business is concerned. As per the report, the estate’s apartment prices shot up by 10.2%, the highest among all listed suburbs.
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Hass noted that land prices in the estate increased too, a trend attributed its development potential. Currently, Lang’ata enjoys a strategic network given the ease in accessing areas including Uperhill, CBD, and Mombasa Road.
“Langata remained the suburb with the highest land price growth on higher density development potential, easy access to major economic nodes (CBD, Upperhill, Mombasa Road) and lower land price per acre compared to neighbouring suburbs,” the Hass report read in part.
In overall, prices of detached and semi-detached houses fell by 1.7% and 0.9% in the third quarter of 2023, while apartments recorded a 1.5% growth in prices as buyers look for value in a challenging economy.
As per the survey, higher interest rates reduced cash flow and in turn affected the demand for own-to-occupy real estate during the third quarter.
In addition, banks exercised stringent lending, mitigating risk of loan defaults in a tightening economy that is characterized by inflation and higher taxation.
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Kenyans in Nairobi suburbs turn to rental apartments
On the other hand, the rental market experienced a price growth of 0.4% on average over the quarter. The growth in rental backed by the outperformance of apartments compared to detached and semi-detached units.
Apartment rental prices, the report stated, grew by 3.2 % in the quarter, with affordability a key consideration, while prices for detached and semi-detached houses fell 0.7 %and 0.4 % respectively.
Suburbs such as Riverside, Lang’ata and Westlands, which are near the city’s main economic hubs performed best in rental price growth of between 1.5 percent and -3.4 percent.
“The apartment market is seeing a price resurgence backed by renewed demand for inflation beating investment assets in a period where the Kenya shilling is losing value,” said Sakina Hassanali, Head of Development, Consulting and Research at Hass Consult.
