Investors in Nairobi have shifted from standalone homes to high-end apartments and master-planned, gated communities.
According to a recent report by Knight Frank, the residential market performance showed a moderation in both price and rental growth.
The sale price index increased by 6.7% over the 12 months to December 2025, from 8.27% in 2024.
On the other hand, prime rents increased by 4.05% from the previous record of 7.46% in 2024.
A decline in residential building approvals prompted developers to shift their focus.
“A 27% year on year (to October 2025) decline in residential building approvals signalled a clear shift in developer behavior, with most focusing on completing existing projects rather than launching new ones,” the report stated.
The residential market faced an average interest rate of 14.9%, accounting for 88.4% of total mortgages.
High mortgage interest rates increased non-performing loans and the dominance of variable-rate lending.
“Despite a rise in the number of mortgages in 2024, the market remained constrained by high average interest rates of 14.9%, increasing non-performing loans, and the dominance of variable rate lending (88.4% of total mortgages), which continued to weigh on affordability,” part of the report read.
According to the report, major launches and investments in master-planned communities by buyers and investors were enhanced by the July 2025 launch of Jabali Towers in Tatu City.
The launch was a mixed-use scheme comprising 350 apartments, Grade A offices, a hotel, and retail.
Also Read: Muthaiga Among Nairobi Residential Areas Where Land Prices Have Dropped- Report
Reason for the Shift Towards Apartment Living
An increasing shift towards high-end living apartments from standalone homes is a result of land scarcity amid the population growth in Nairobi.
Additionally, relatively few people can afford a hundred million shillings and a standalone home in the suburbs.
The inability to afford standalone homes in areas such as Muthaiga, Kitusuru, Karen, and Lavington, as well as in suburbs, has encouraged developers to focus on high-quality apartments.
Developers are now aiming to design units for the growing upper middle class in areas such as Westlands, Riverside, Upper Hill, and Kileleshwa.
Well-regarded locations for development attract residents seeking access to exclusive areas and investors seeking to rent out areas.
Also Read: Israeli Investor Turns 520 Acres in Nakuru into Dream Agri-Residential Haven
Demand for high-end developments that are well secured and serviced is expected to continue in 2026 as high-net-worth individuals, expatriates, and diaspora buyers seek security in the market.
Investment in large master-planned communities, such as SEZs, is forecast to continue, according to the report.
New gated developments in areas such as Runda, along Kiambu Road, including Phase 2 of Ineza, and Runda Paradise have emerged during the shift.
Sustained demand for luxury living in prime urban locations also led to the launch of branded residences such as s Le Mirage by CityBlue.
Tatu City Investments, during the launch of Jabali Towers
Tatu City made several investments, including a major agreement with Business Bay Square to develop a 60-acre mixed-use project valued at approximately KES 65 billion.
It also made investments in high-end residential units, retail, office space, and logistics facilities.
Hounen, a Chinese multinational real estate developer, also announced plans to invest in more than fifteen acres within Tatu City.
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