Landlords in high-end estates are counting losses as effects of the spread of the Covid-19 pandemic continues to erode rental earnings.
According to the latest Hass Consult Property Index, rent income from high-end estates such as Runda, Spring Valley, Loresho, Kitisuru and Lavington fell marginally in the first quarter of this year, with analysts warning the worst is yet to come.
"Whereas the property market began showing signs of resilience as confidence trickled in, the Covid-19 pandemic which was first locally recorded in early March, will have an effect going forward,” said Sakina Hassanali, Head of Research and Marketing at Hass Consult.
Ms Hassanali said the effects of the pandemic will emerge in the second quarter. "Globally, the pandemic has caused markets, across all asset classes to perform poorly but the extent of this effect on our local market will depend on how we manage the Covid-19 pandemic.”
Last month, Treasury ruled out suggestions that the government should be compelled to waive rental payments for tenants whose income has been impacted by the pandemic.
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Compared to last year, Kitisuru saw rental yields fall the sharpest by 7.7 per cent, followed by Loresho (7.3 per cent), Spring Valley (6.5 per cent) and Lavington (3.4 per cent).
In other estates however, landlords have seen an increase in rental yields. Gigiri, Kilimani, Langata and Rigeways recorded a marginal increase in rental yields.
Land prices similarly fell across both suburbs and satellite towns in the first quarter of this year, sustaining the decline recorded in previous quarters.
Gigiri, Kilimani, Langata and Upper Hill reported a decline of between 1.6 and 2.8 per cent in the first quarter of 2020. Land prices in Thika, Kiserian and Ruaka similarly went down in the period under review.
Hassanali said in the short term, landlords and agents will be pressured to offer rent discounts and freezes as the stay-at-home orders are extended and economic activity remains low.
Hassanali however said despite the challenges brought by the pandemic, there could be an opportunity for investors if the situation is well managed and there is a gradual recovery in the economy
“The COVID-19 pandemic has left some landowners with unexpectedly limited liquidity and as a result we may see a bigger supply in land moving forward,” she said.