Investors in Nairobi Satellite areas have recorded growth in rent and sales of their houses in the second quarter of this year, cashing out on urbanization going on in the regions.
- Houses in Kiserian recorded increase in sales of 5.2 per cent compared to the first quarter while Ongata Rongai estate led with a 4.6 increase in rental prices compared to the previous quarter.
- Hass Consult Property Index tracked houses in both Nairobi Suburbs and its Satellite town comparing unit sales and rental income.
- Apartments in Upperhill had lowest quarterly increase in both sales and rental prices, -3.9 per cent and -4.3 per cent over the last quarter respectively.
Nairobi’s Satellite towns led in property price growth with a 2.1 per cent increase over the quarter, while Nairobi’s suburbs show a modest decline of 0.9 percent.
“This rise in satellite towns can be attributed to accelerated urbanisation, which has bolstered demand and pushed up asking prices,” noted Sakina Hassanali, Head of Development Consulting and Research, at Hass Consult.
Property owners are cautious about raising rents to retain tenants amid higher taxes and inflation, which has constrained disposable income.
Rental yields differ significantly between Nairobi’s suburbs and satellite towns. In the suburbs, the average yield increased to 7 per cent by the end of June from 6.9 per cent in March.
Conversely, rental yields in satellite towns decreased slightly from 4.9 per cent in March to 4.8 per cent in June, reflecting varying market conditions in these areas.
The recent data illustrates that despite high interest rates and a strengthened shilling impacting foreign buyer advantages, property sales prices have continued to rise albeit at a lower rate.
The Central Bank of Kenya (CBK) in April retained its benchmark lending at 13 per cent, citing positive progress in cost of living and exchange rate in the Kenyan market.
“While higher interest rates on mortgages don’t have a significant impact on market wide property price movements due to the low mortgage participation in the country, the rise in rates have the effect of reducing market liquidity in general resulting in a dampening of demand. So far, the property market has shown resilience with price stability still being witnessed across most areas,” said Hassanali.
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