Land prices on the Outskirts of Nairobi have shot up in the last year, a new report has revealed.
According to a resent report released by HassConsult, satellite towns of Ngong, Ongata Rongai, Tigoni and Kiambu went up significantly dispelling fears that a two-year Covid-19 pandemic and last year’s General Election could push over investors.
Juja, Kiserian and Syokimau however dropped from the list of the most coveted areas. Athi River on the other hand moved up the list of properties currently on the land buyers watch. This is mainly attributed to speculations of extending the Standard Gauge Railway (SGR) to the Export Processing Zone (EPZ) in the area.
Despite the EPZ speculation and cash-in rush, Athi River just sparked a speculation and led to a 6.1 per cent increase in land prices over the quarter, even as Ngong town held its high of surge prices at 6.2 per cent compared to a year ago.
The Report however lists the previously coveted Kitisuru, Nyari, and diplomatic Gigiri zone as having significantly lost their shine in demand for land. This, even as the cost of an acre of land in Nairobi hit a high of Ksh.194 million, on average.
Areas with the highest prices of land per acre include Upper Hill (Ksh.486 million), Westlands (Ksh.450 million), Parklands (Ksh.405 million), Kilimani (Ksh.397 million), Riverside (Ksh.321 million), and Gigiri (Ksh.233 million).
Ruaka leads the lot of high land prices on Nairobi’s outskirts at Ksh.98 million, followed by Kiambu (Ksh.44 million), Mlolongo (Ksh.34 million), and Ngong (Ksh.30 million) closing in on Mlolongo. Athi River, however, staggered at Ksh.17 million despite an increase in land prices by 6.1 per cent.
Land prices in 10 out of 18 Nairobi suburbs are now above pre-pandemic levels, driven by sustained confidence and renewed development activity, the report further shows. Ruaka has been listed as the most expensive suburb with the average price of an acre now shy off Ksh.100 million.
“Land prices in Nairobi’s satellite towns increased by 1.28 percent over the quarter, continuing their trend of higher appreciation rates compared to similar parcels in the city. This is attributed to the towns’ affordability and improved infrastructure, making them attractive to investors,” said Sakina Hassanali, HassConsult’s Head of Development Consulting and Research.
“Year on year growth shows land prices in the satellite towns increased by 8.08 per cent compared to a 1.42 per cent annual increase in land prices in the city.”
Meanwhile, Nairobi’s Donholm, Kitisuru, Lang’ata, Loresho, Muthaiga, Nyari, Ridgeways, Runda, Spring Valley, and Westlands suburbs have increased their land values above their pre-pandemic rates. This is in line with the desire to expand the Gigiri area.
On the rental side, middle income earners with disposable income for rent ranging between Ksh.25,000 and Ksh.50,000 are now residing in the satellite towns, even as the rental market declined by 0.5 per cent on lack of jobs among other post-pandemic issues.
The influx of middle-class populace in the satellite towns, particularly in search for apartments, has seen an increase in the overall returns, as indicated by rental yields and capital gains.
Most apartments located in satellite towns recorded average rental returns of 3.4 per cent over the quarter and 9.0 per cent annually, respectively.