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The Nairobian

High land prices push investors further away from Nairobi

News

By Frankline Sunday | Jan 26, 2016

Property values in counties around Nairobi have continued to rise, with investors being forced further away from the city and its environs over the prohibitive pricing.

According to the latest housing index from property firm Hass Consult, investment in counties like Machakos, Kiambu and Kajiado have increased over the last year, increasing earnings for sellers but hiking costs for buyers and tenants.

“Due to rising demand, land prices in these satellite towns have now tracked similar growth rates to land in Nairobi at 11.9 per cent over 2015, with Kiserian running well ahead of the average at a growth rate of 25.3 per cent,” said Sakina Hassanali, the head of research and marketing at Hass Consult.

Land prices in Nairobi have risen by over 500 per cent in eight years, from Sh30 million an acre in 2007 to over Sh170 million today, fuelling speculation of a property bubble.

Land in Nairobi’s suburbs further rose by 9 per cent, with Kitisuru, Loresho and Gigiri recording the highest increases last year at 26.1 per cent, 23.4 per cent and 14.6 per cent, respectively.

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In addition, mixed-use developments such as the Garden City Mall and Centum’s Two Rivers have boosted property values in these areas, as investors angle for the yields anticipated from high-end developments.

“Upcoming infrastructural developments in Ruaka have increased the value of land more than five times over, with an acre now selling at Sh58.6 million,” the report notes.

“Kiambu and Mlolongo have second and third highest prices for an acre, respectively, now priced at Sh35.9 million and Sh27.2 million. An acre in Athi River is currently selling at Sh11.4million, almost seven times more than its cost eight years ago.”