Landlords in the upmarket residential property segment are increasingly finding the business not viable as tenants look for cheaper options.
New data from real estate firm HassConsult shows that building posh accommodation is becoming a “losing venture” as more Kenyans try to adjust to thinning pockets.
“Asking rents for a modern apartment may cost as little as Sh23,400 and this bodes well for many tenants who are now preferring affordable units as they take caution to save in the wake of job losses across all sectors,” said HassConsult Head of Research Sakina Hassanali.
“Notably, as the cost of living soars, the lower middle class is opting to pay slightly more in transport but less in rents.”
The company was releasing the Hass Property Index for the third quarter.
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Ms Hassanali said owing to worsening economic prospects, many Kenyans were retreating to “far-flung” areas in search of more affordable shelter.
“Satellite towns with newly finished modern units, but with more affordable asking prices, are a favourite for bargain hunters, who led to increased asking prices for rents in Thika, Limuru, Mlolongo, Tigoni, Ongata Rongai, Kitengela and Ruaka metropolis between July and September,” read the report.
Hassanali said high-end residential developments were losing business to the low-end ones due to price dynamics.
The data shows the average value of a house in Nairobi went up from Sh7.1 million in December 2000 to Sh31.2 million in September 2019. The average value for a 4-6 bedroom property is currently Sh39.1 million, while the average value for a 1-3 bedroom house is currently Sh14.4 million.
The study further shows apartments are the most rented property.