Rent for prime residential buildings in Nairobi decreased by 2.9 per cent in the first quarter of this year.
Currently, a prime residential house in Nairobi’s upmarket estates goes for a minimum of Sh250,000, while stand-alone houses and town-houses attract Sh300,000.
This is according to the Knight Frank Prime Global Rental Index 2016. Knight Frank is an independent global property consultancy. The fall in rental prices has been attributed to rising supply and falling demand for these properties, giving tenants choice and room to negotiate with landlords.
“Demand for prime rental properties has traditionally been from expats. Rents have trended lower as we are seeing weakened demand from this segment of the market due to multinational firms downsizing as a result of adverse economic circumstances driven by low commodity prices,” Charles Macharia, Senior Research Analyst at Knight Frank Kenya said.
The index tracks the performance of luxury residential rents across 17 key world cities.
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It notes that one of the factors affecting demand from expatriates has been the slowdown in the oil industry which has resulted in downsizing of operations by firms in that sector.
In December 2015, however, rent for prime residential houses increased by 1.5 per cent.
The index also notes that usually, luxury rental and sales markets tend to move in opposite directions, with buyers targeting capital appreciation. The most luxurious in this class of properties are nonetheless still attracting high-paying tenants.