Prices of land and houses at new low

Head of Development Consulting and Research at Hass Consult Sakina Hassanali briefs the press during the release of Hass Property Index for the fourth quarter of 2017 in Nairobi. [Wilberforce Okwiri, Standard]

Property owners and developers recorded the lowest returns last year, with some segments registering the worst performance in 17 years.

Data from the Hass Property Index covering the fourth quarter of 2017 shows significant drops in rents and sale returns relative to previous years in most residential property markets.

“Asking rents for all properties fell by 1.2 per cent in the quarter and overall fell by 3.9 per cent in the year,” said the head of development consulting and research at Hass Consult, Sakina Hassanali, during the report’s release in Nairobi yesterday. The highest declines were reported in Lavington, Kileleshwa, Upperhill, and Westlands, where rental prices fell by 13, 14, 11, and 10 per cent respectively compared to 2016.

This means that a three-bedroom apartment in Lavington that was renting at Sh60,000 a month in 2016, for instance, currently goes for approximately Sh51,000 today. 

“The protracted election process, limited financing, high inflation, and tightened liquidity were largely felt in the low and top-end market segments,” said Ms Hassanali.

“Reduced spending meant even those who would otherwise consider a high-end market house compromised and settled for community living in a semi-detached housing neighbourhood available on both sale and let.”

The index further indicates total returns (rental yields plus price appreciation) in semi-detached houses fell from 21.1 per cent in 2016 to 7.3 per cent last year. Rental yields for apartments, on the other hand, were recorded at six per cent last year, the lowest since 2001.

Developers of large-sized family apartments have felt the pinch more as a glut in the market segment has meant tenants with larger discretionary income have more options to choose from.

Land prices for both Nairobi and satellite towns similarly recorded the slowest growth rates in close to a decade, with returns falling on account of political risk for the first time. Donholm was the best performing suburb, with land prices increasing by 12 per cent.