Parklands, Upperhill and Kileleshwa lead in land price surge as Karen lags

A general view of Nairobi skyline from UpperHill, Nairobi. [File, Standard] Land prices in the Nairobi satellite towns grew at a slower rate of 1.0 per cent for the first time in 18 months. This was on the back of a tough economy that put a dent in demand from middle-class buyers since June 2023. According to the land price index report by Hass Property Index, economic challenges and high interest rates impacted the ability of developers to finance land purchases. The report notes that Thika and Mlolongo had the biggest price growth decline, going from 6.3 per cent and 6.6 per cent in the third quarter to 0.9 per cent and 1.1 per cent respectively in the fourth quarter. Prices in Nairobi's suburbs however grew by 1.7 per cent in the fourth quarter of 2024, slightly higher compared to quarter three's growth of 1.6 per cent. Parklands, Upperhill, Spring Valley and Kileleshwa led in price appreciation in the period under review with a growth rate of 3.4 per cent, 3.3 per cent, 3.1 per cent and 3.0 per cent respectively. Spring Valley had the highest annual increase in land price while Kilimani had the lowest. Among the satellite towns, Kiserian had the highest annual increase while Ngong had the lowest. The average cost of an acre of land in satellite towns rose by 1.9 per cent in the period, down from 3.02 per cent in the previous quarter - the lowest rate of expansion. Nine out of the 14 towns tracked recorded a deceleration in price expansion, led by Thika and Mlolongo, where growth fell from 6.3 per cent and 6.6 per cent in the third quarter to 0.9 per cent and 1.1 per cent, respectively, in the fourth quarter. Kiambu and Ngong recorded negative growth, while notable declines were also seen in Ruiru, Syokimau and Kiserian. Satellite towns have in previous quarters seen impressive growth, driven by both private and commercial property developers, but a tough economy has impacted would-be land buyers. "Periods of economic uncertainty and slowing GDP growth can lead to some developers putting off decisions to acquire land, thus reducing demand which drives prices higher," said Head of Development Consulting and Research at HassConsult Sakina Hassanali. "It also shows that the infrastructure-led price boost in areas such as Thika, Kiserian, Mlolongo, and Syokimau is starting to wane." The increase in prices in the suburbs remained steady at 1.7 per cent, compared to an increase of 1.6 per cent in the third quarter. Suburb price gains were led by Parklands, Upperhill, Spring Valley, and Kileleshwa. In the index, Upperhill had the highest land rate per acre at Sh522.7 million, closely followed by Westlands at Sh487.3 million, Parklands at Sh448.7 million, Muthangari at Sh384.7 million and Riverside at Sh340.4 million. Among the suburbs, Karen had the lowest land rate per acre of Sh69 million, followed by Ridgeways at Sh92.2 million, followed by Runda at Sh93.3 million and Kitisuru at Sh98.2 million. According to the Index, Ruaka attracted the highest land rate per acre at Sh111.2 million. [Esther Dianah] Kiambu came in second at Sh49.6 million, Mlolongo came in third at Sh43.3 million followed by Syokimau at Sh37.8 million. On the other hand, Kiserian had the lowest land rate per acre of Sh12 million, followed by Kitengela at Sh17.8 million per acre. In the review period, The Hass Property Index said the sale prices grew at a faster pace in 2024 as buyers raised demand for standalone units. Detached houses led the market with price growth of 1.5 per cent quarterly and 7.5 per cent annually, while semi-detached houses and apartments had mixed performance, with quarterly declines of 0.8 and 0.6 per cent but annual growth of 0.8 and 1.6 per cent respectively. The report further showed that Ridgeways and Loresho led suburban annual price gains for houses at 12.5 and 11.6 per cent, while Juja topped the satellite towns with 12.9 per cent annual growth. The strong annual growth was supported by a rise in detached house prices, which grew 1.5 per cent quarter-on-quarter and 7.5 per cent year-on-year. However, semi-detached and apartment prices faced pressure in the fourth quarter, with declines of 0.8 and 0.6 per cent respectively, despite posting annual gains of 0.8 and 1.6 per cent. "Detached units performed strongly both quarterly and annually due to their limited supply relative to other property types. In contrast, the increasing availability of multi-dweller units such as apartments has slowed their price growth," said Hassanali. On the rental market, asking prices rose by 0.2 per cent in the fourth quarter, reversing the 0.6 per cent decline seen in the third quarter. However, annual rental prices were effectively flat at -0.02 per cent for 2024, reflecting the challenges landlords faced in raising rents amidst tough economic conditions. The quarterly recovery in rents was led by Gigiri and Juja, which recorded rental price increases of 6.7 and 6.4 per cent, respectively. In the apartment segment, Ongata Rongai and Parklands led with quarterly gains of 3.4 per cent and 3.3 per cent respectively. "The recovery in quarterly rental prices coincided with falling inflation, which improved tenants' purchasing power and gave landlords room to adjust rents upwards," noted Hassanali. Ridgeways and Loresho posted the highest annual price gains in the suburban house segment at 12.5 and 11.6 per cent respectively, while Juja, Kiserian, and Ongata Rongai led among satellite towns with annual growth rates of 12.9, 8.7, and 8.1 per cent. Despite these positive trends, property returns for 2024, comprising capital gains and rental yields, remained below returns from other asset classes. Yields stood at 7.2 per cent in suburbs and 5.0 per cent in satellite towns, compared to Treasury bill interest rates of between 9.5 and 11 per cent.

Parklands, Upperhill and Kileleshwa lead in land price surge as Karen lags

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Parklands, Upperhill and Kileleshwa lead in land price surge as Karen lags

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