Retirees boost demand for gated communities amid housing supply imbalance

Developers are increasingly turning to master-planned communities as more buyers show renewed preference for them. A recent report also shows a slowdown in new housing units, as investors seek to avoid oversupply in the market.

According to the Kenya Market Update report for the first half of this year, the slowdown has also been driven by prevailing economic conditions.

The report documents how retirees are driving demand across the gated community market segment as well as prime apartments.

Gated communities are being preferred for their safety and security selling point, while prime apartments are suitable for retirees seeking to downsize after their children grow out.

However, the report by real estate consultancy Knight Frank notes that there is a shortage of maisonettes and bungalows,

As such, demand has spiked, causing rents in prime residential properties to increase by 0.73 per cent in the period compared to December 2025.

Sale prices of the same have gone up by 6.2 per cent over the same period.

“The increase reflects a continued shortage of quality prime housing stock, particularly bungalows, villas, townhouses, and maisonettes, amid sustained demand from owner-occupiers and renters,” the report says.

The report indicates that the resulting supply-demand imbalance has continued to exert upward

pressure on both rental and capital values.

The flipside of this is that there is an oversupply of prime apartments in the city suburbs. This is when the development pipeline is considered.

However, Knight Frank notes that retirees and expatriates seeking convenience are sustaining demand.

“Although the current development pipeline suggests that supply has outpaced demand, market evidence indicates that demand remains supported by retirees seeking downsized homes, empty nesters transitioning from larger suburban residences, expatriates requiring conveniently located accommodation and investors acquiring units for rental income or as pied-à-terre residences,” the report says.

“These buyer segments are expected to continue underpinning demand for well-located, high-quality apartment developments.”

The report states that when it comes to stand-alone homes and units in gated communities, buyer and tenant preferences continue to evolve in favour of the latter.

“Beyond the security benefits, gated developments increasingly appeal because of their stronger sense of community, enhanced social interaction, well-maintained environments and lifestyle amenities,” the report says.

Again, in this market segment, retirees are the ones driving demand.

“This trend is evident among both young families seeking community-oriented neighbourhoods and retirees looking for secure, low-maintenance living environments, making gated communities an increasingly attractive development model for residential developers,” the report says.

Knight Frank explains that the quality of outdoor living environments has emerged as a key differentiator within the prime residential market.

Buyers are said to be increasingly willing to pay a premium for developments incorporating substantial natural green spaces, with demand consistently outperforming comparable projects that lack meaningful landscaped areas.

“This preference has extended beyond standalone housing into high-rise residential developments, where developers are increasingly allocating larger proportions of sites to landscaped open spaces as a means of product differentiation and value creation,” the report says.

The report lists Tilisi and Limuru environs, known for such green spaces, among Nairobi’s emerging residential nodes.

“Its strategic location, proximity to Nairobi, planned infrastructure, and tranquil natural environment continue to attract both developers and homebuyers seeking alternatives to the increasingly congested traditional suburban market,” the report says.

The report takes note of several notable residential developments that were introduced during the review period, including Keza Laika by Mivida Homes, the launch of 156 Elara within Tatu City, and the breaking ground of Jabali Towers, further reinforcing Tatu City’s position as one of Kenya’s leading integrated urban developments.

“These projects reflect sustained developer confidence in master-planned communities that combine residential, commercial, educational and recreational amenities while offering high-quality infrastructure and lifestyle-oriented environments,” the report says.

But despite continued project launches, Knight Frank notes that planning activity indicates that developers have become increasingly cautious.

It cites the value of approved residential building plans in Nairobi that declined by about 10 per cent to Sh41.0 billion during the first quarter of 2026 from approximately Sh45.7 billion recorded over the corresponding period in 2025.

“The decline suggests that many developers are prioritising the completion and absorption of existing developments rather than commencing new residential projects,” the report says.

“This disciplined approach reflects prevailing market conditions, where maintaining healthy occupancy and sales rates has become increasingly important amid heightened competition and evolving buyer preferences.”