Prices of luxury homes in Nairobi increased by 1.5% in the first three months of the year, this is according to the Knight Frank Prime Global Cities Index.
This is the strongest quarterly growth since the third quarter of 2013 (2.2%), largely helped by realistic pricing by developers and sellers. The days of significant double-digit increases are behind as the market has reacted to the level of supply available.
The Knight Frank index, which tracks price changes in local currency, shows annual and six-month growth to March was 3.3% and 2.2% respectively. Based on the annual performance, Nairobi is ranked 15th in the 35-city survey, up two positions from 17th in the last quarter of 2015.
In Nairobi, the index tracks luxury homes currently priced from US$0.8 million (Ksh 80m), which are stand-alone units of superior quality and finishing, each sitting on at least half an acre of land in a prime address of the city.Such properties are increasingly located in gated compounds.
While supply in the prime residential market has been growing gradually, local high net worth individuals looking to buy are only settling for the best-in-class properties and there is currently more options to choose from.
Anthony Havelock, Head of Agency at Knight Frank Kenya, said: “Data on deals in the prime residential segment remains scarce, but there are still some strategic, individual transactions happening albeit in low volumes.”
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Trends show that the Kenyan HNWI has grown more sophisticated and this class of buyer must get better value at the very top-end of the market, starting primarily with the property’s location. Quality remains particularly important.
“While there is still a lack of units befitting the quality that buyers are seeking, we are noticing that sellers are becoming realistic in pricing and HNWIs are increasingly looking to purchase properties at the right price and quality,” Havelock said.
Vancouver, Canada, topped the PGCI rankings for the fourth consecutive quarter, with prime residential prices in the city increasing by 26% in the year to March. Shanghai, Sydney and Melbourne also recorded double-digit annual price growth.
New York and London recorded annual price increases of 2.3% and 0.8% respectively in the year to March 2016.
