Land depreciation hits seven Nairobi premier suburbs
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Loading... - Sarah Muema
- 13 Feb 2023
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For decades, investing in land in Kenya’s capital, Nairobi was a sure bet and a safe haven in a market where prices doubled every two years driven by speculation, a bulging middle class and a club of high-net-worth earners chasing after assured returns at low-risk.
But a Business Daily analysis of data covering the past five years challenges this trend, showing that at least seven of the high-end suburbs in Nairobi have lost value by up to 11 percent between 2018 and 2022, reflecting the stagnating demand for Grade A office space and high-end residential apartments as a result of oversupply.
Historical land prices data provided by realtor HassConsult shows that land prices in Upper Hill, Kilimani, Parklands, Lavington and Gigiri declined by 11 percent, five percent, four percent and three percent respectively between 2018 and 2022.
This means that an acre of land in these suburbs is cheaper today than it was five years ago, leaving investors who wanted to sell today scratching their heads, in a major market upset seen by some analysts as a ‘price correction’.
Hass Consult says that Upper Hill was experiencing an oversupply of commercial office space that had seen developers adopt a “wait-and-see” attitude before committing capital to new projects, while housing developers in the suburbs are waiting for inventory to get sold and vacancy levels to improve before rolling out new units.
The real estate sector was negatively hit by the Covid-19 pandemic in 2020 and 2021, where work-from-home plans reduced demand for office space in the city.
The fall in consumer spending power and caution over investing due to job losses and business closures also affected demand for new houses, leaving developers unable to put up new units. Read More…
