Land prices in satellite towns have continued to increase riding on the demand for student accommodation.
Data from property firm HassConsult showed that land prices in satellite towns jumped 2.17 per cent in the first quarter of the year.
This is as land prices in Nairobi - beyond reach for many of Kenya’s working-class - stagnated at 0.11 per cent.
Investor appetite was best reflected in the satellite towns of Thika, Juja and Ruiru where asking prices per acre rose by 6.3 per cent, 4.6 per cent and 1.6 per cent respectively.
Thika, said the Hass Property Index, was the best performing town in the quarter with the asking price for an acre at Sh21.5 million, a 6.3 per cent rise from a similar period last year.
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The asking price for an acre in Ruiru was Sh27.3 million, a rise of 1.6 per cent while in Juja an acre fetched Sh17.4 million, up from 4.6 per cent.
HassConsult Head of Development Consulting and Research Sakina Hassanali observed that such towns host institutions of higher learning which are expanding. This, she said, has drawn developers and investors including private equity firms who are keen to provide student housing.
“Students, the teaching fraternity, and ancillary services providers are looking for quality housing that will also reduce their transportation costs and commuting time,” said Ms Hassanali.
“Developers are therefore investing in putting up modern student housing that will cater to this demand which has translated into higher land prices on these strategically located towns catering to the student ecosystem.”
Satellite towns are located next to major cities and are grown by an emerging middle class and investors seeking less expensive land outside the capital. This boom has also roped in other areas that used to be farmlands such as Kajiado, Ngong, Kitengela and Athi River.
Ruaka, another of the satellite towns, had the highest price per acre at Sh92 million. The lowest price per acre in these areas is Kiserian, Kajiado County with a Sh9.4 million tag.
Upper Hill has the highest price per acre of Sh499 million among the suburb areas
The highest land price drop in the quarter was recorded in Limuru where the price of an acre fell by 6.1 per cent to Sh21.5 million. Land price in Athi River dropped by 3.9 per cent to Sh15.1 million for an acre while Mlolongo fell slightly by 0.1 per cent to Sh31.4 million.
In the suburbs, a drop in asking prices was witnessed in Donholm (1.4 per cent) to Sh68.9 million, Gigiri (1.2 per cent) Sh227.8 million, Kilimani (0.8 per cent) Sh406 million, Runda (1.0 per cent) Sh86.8 million and Upperhill (1.5 per cent) Sh499.9 million.
The highest gain in the suburbs was in Muthaiga at 3.11 per cent. This is while Juja had the highest annual gain with prices in the satellite town increasing by 16.95 per cent.
“On the tail end, Upper Hill recorded a 1.5 per cent quarterly growth while in the towns Limuru prices cooled by 6.08 per cent. Annually, Donholm slowed by 3.61 per cent and in the towns, Limuru prices dropped by 7.61 per cent over the same period. Upper Hill had the most expensive land at Sh500 million while Ruaka prices are now at Sh92 million per acre,” said the property index.
Ruaka is among the satellite towns that saw a growth in rent (2.9 per cent). Other towns with increases in rent prices are Ngong and Kitengela at 5.5 and 5.2 per cent.
“Ruaka enjoys easy access to the city’s more affluent suburbs, rendering high land values that can only be absorbed on high-density apartment developments,” said Hassanali.
Hassanali said that due to the land high values, Ruaka has become the largest stockholder of apartments within the satellite as it presents the ability for the working population to enjoy both housing affordability and reduced transportation costs.
Hassanali added that investors were keeping an eye on the Landlord and Tenant Bill, 2021 which if enacted into law will give the government power to cap rent increases on commercial and residential premises. The bill might influence the direction of rents.