The real estate market in Nairobi saw a decline in rental prices in several suburbs during the third quarter of the year from July to September.
Recent analysis from Hassconsult reveals a downturn in rental prices across several suburban areas while land values demonstrate remarkable resilience in specific locations. The rental market has experienced particular softening in peripheral areas, with Kitengela leading the decline at 3.6 per cent. Neighbouring regions Ngong and Kiserian have followed suit, recording decreases of 2.8 and 1.1 per cent respectively. This downward trend has also affected areas such as Mlolongo, Tigoni, Limuru, and Gigiri. Market analysts attribute this cooling to recent socio-political disruptions, specifically the anti-government demonstrations that hampered economic activities.
The broader economic context, marked by escalating inflation and higher interest rates, has further constrained consumer spending power, subsequently affecting rental demand. The construction industry’s performance mirrors these challenges, with government data indicating a 2.9 per cent contraction during the quarter. This decline suggests diminishing returns for property developers and investors, particularly in rental income streams. However, economic forecasts offer some optimism, as anticipated reductions in interest rates and inflation could revitalize consumer purchasing power, potentially stimulating both rental and sales markets.
In contrast to the rental sector’s challenges, the land market has demonstrated remarkable dynamism. Particular areas have emerged as hotspots for land acquisition, with Mlolongo and Limuru experiencing substantial upticks in purchase activity. The market has also seen robust interest in Kiserian, Parklands, Thika, Kileleshwa, and Lang’ata. Parklands has distinguished itself with the highest land price appreciation at 3.4 per cent, followed closely by Kileleshwa and Lang’ata at 2.9 and 2.8 per cent respectively.
This growth is largely driven by these areas’ suitability for multi-dwelling developments which continue to gain popularity among developers and investors. Despite current headwinds in the rental segment, the overall real estate market maintains underlying strength, particularly in land values. The current rental price adjustments appear cyclical rather than structural, with market fundamentals suggesting potential recovery as economic conditions stabilize.
