Boom for city landlords as rental yields hit 10-year high

Rental yields in Nairobi have rebounded to a 10-year high, turning around the fortunes of city landlords reeling from the effects of a glut in the property market.

This is according to the latest Hass Consult Property Index that shows rental yields on apartment recorded a 15.9 per cent rise last year as the sector marked an overall improvement across all property classes.

“We saw an industry-wide recovery in the final months of 2018, with rents rising, sales prices rising and industry activity picking up generally after the marked declines of 2017 and early 2018,” said Sakina Hassanali, head of development, consulting and research at Hass Consult during the report’s release in Nairobi yesterday.

She said rental yields for semi-detached houses also bounced back last year, rising 12.6 per cent, the strongest uptick in the last two years. Rental prices for detached houses at the same time continued to suffer from weak demand, shifting up just 3.7 per cent last year.

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“The somewhat slower pace of apartment building in the last two years has finally seen demand catching up with the available space, lifting occupancy and driving apartment rents upwards sharply by November and December 2018,” explained Ms Sakina.

In 2017, rent and sale returns for apartments and standalone houses posted significant drops relative to previous years as newly constructed units competed for the few tenants who could meet the relatively high rental costs.

The highest declines were reported in Lavington, Kileleshwa, Upperhill and Westlands where rents fell by 13 per cent, 14 per cent, 11 per cent and 10 per cent respectively compared to 2016.

Detached and semi-detached houses recorded between nine and 9.7 per cent rise in sale prices respectively, indicating a growing demand for the same.

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