Trump aid cuts: Expats' exodus leaves leafy suburb developers in limbo

People protest against the administration of US President Donald Trump's decision to virtually shut down the United States Agency for International Development (USAID) at the US Capitol in Washington, DC, on February 5, 2025. (Photo by Drew ANGERER / AFP) One of the advantages of being an investor in high-end property in some of Nairobi's suburbs is the ever-ready clientele from the non-governmental organisation (NGO) space. But after President Donald Trump announced budget cuts to USAID, the American government's agency for aid-related activities, this market not only witnessed a drop in clients but also in asking prices for units on sale. USAID is a major funder of NGOs in the country, according to 2023 figures, with its budget for programmes in Kenya standing at $435 million (Sh56.6 billion). Following the formation of the Department of Government Efficiency, which seeks to reduce wastage both in human resources and funding, USAID may not operate as it used to due to this scrutiny. This has left investors who sank their money in high-end properties in areas such as Kitisuru, Muthaiga, and Gigiri, popular with the diplomatic and NGO community, in limbo as to how to recoup their investments. Mark Dunford, chief executive of Knight Frank Kenya, a real estate consulting firm, says the market needs to shift its focus from the foreign to the domestic market. It is the only way, he says, developing countries can cope in the wake of President Trump's sweeping changes in government spending. "The only real way to be defensive against a force like President Trump is to reduce your reliance on foreign aid so you can start depending on the domestic market," he says. He notes that a market like Dubai is built on 95 per cent foreign and five per cent domestic. But European markets are 95 per cent domestic and five per cent foreign. "So, if you have a disaster in the European market, the domestic market really cannot go anywhere. That will help to mitigate that risk," he told The Standard in a recent interview on the sidelines of the East Africa Property Investment (EAPI) Summit. But when it comes to depending on the domestic market, Daniella Nyakuraya, SIC Housing Unit manager, advises investors to be patient since cash flow will not be the same. The challenge with having a low-paying tenant is that some of the amenities in the unit may not be as well-maintained as before due to cash constraints. While this could be commensurate with the amount of rent being paid, it may force the owner to dig deeper into their pockets to keep those amenities running. "If you are not getting as much rent, you may not do as much as you were doing when you were getting high rent. If you have to repaint every year, then you do not have to. If you have to buy furniture every time a tenant moves out, then you don't have to," she explained. Ms Nyakuraya noted that an investor can still get the NGO and diplomatic clientele even with the Trump budget cuts but with more marketing, especially if their units had not been in the market for long. This can be done through partnerships with real estate agents. "USAID has left, but there are still expatriates. You may now need to market your unit more than before, and that is an extra cost that you have to budget for," she said in an interview. Additionally, this clientele can be sourced from international firms. The unit owner can opt to give a concession to make the lease more attractive. There is also the option of converting the property into a short-stay unit. "The problem with a huge unit (for short stays) is that you need a specific client. It is either a family or a large group, and it is not easy to get," she said. A recent index by HassConsult, a real estate developer, showed Westlands is one of the areas where property prices have dropped as the effects of President Trump's aid cuts settle in the market. As prices in satellite areas such as Juja are climbing, leafy suburbs associated with diplomats and workers working with major NGOs or their head offices are dropping. The index reports that property prices in Nairobi's suburb contracted for a fifth straight quarter in the period, albeit by a slimmer margin of 0.4 per cent compared to 0.8 per cent in the fourth quarter of 2024. Apartment prices dropped by 13.3 per cent in the last year in Westlands and by 6.6 per cent in the first quarter of 2025. Apartment prices in Riverside dropped by 10.4 per cent, while house prices in Gigiri went down by 7.8 per cent and Kitisuru by 3.8 per cent. The asking price for apartments in Riverside dropped 5.5 per cent in the quarter, followed by Muthangari (4.6 per cent) and Lavington (2.0 per cent), respectively. Apartment rental prices in the first quarter of the year contracted the highest in Lang'ata by 2.7 per cent, followed by Riverside (2.2 per cent), Westlands (2.2 per cent), Upperhill (1.1 per cent), and Kileleshwa (1.0 per cent). Overall, asking rental prices in Nairobi suburb areas dropped the highest in Muthaiga by 4.9 per cent, followed by Nyari Estate at 4.7 per cent, Kilimani at 4.6 per cent and Westlands at 3.1 per cent. HassConsult explained that the global economic uncertainty is influencing property markets worldwide, and Kenya is no exception, citing geopolitical tensions, interest rate shifts, and policy changes that have prompted more cautious investor behaviour. The developer cited the United States as an example, stating that the real estate market in the economy dropped by 30.5 per cent in the first quarter of 2025, while in Australia, investment lending rose by 18 per cent amid expectations of rate cuts and market volatility. "Locally, in the pricier city suburbs, the fall in asking prices revealed concerns about a fall in demand after the US cut off funding for its USAID programme and its affiliated programmes in Kenya. This action has led to mass layoffs, which affect the target market for the higher-end rental segment," it explained.

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