This archive report was first published on 30 October 2019.
October 30, 2019, marked a significant shift in the Kenyan real estate market as data from HassConsult revealed that high-end residential developments were losing business to low-end ones due to price dynamics.
According to the Hass Property Index for the third quarter, the average value of a house in Nairobi increased from Sh7.1 million in December 2000 to Sh31.2 million in September 2019. However, this upward trend has not translated to increased demand for luxury properties, as tenants are increasingly seeking more affordable options.
"As the cost of living soars, the lower middle class is opting to pay slightly more in transport but less in rents," said HassConsult Head of Research Sakina Hassanali. "Satellite towns with newly finished modern units, but with more affordable asking prices, are a favourite for bargain hunters, who led to increased asking prices for rents in Thika, Limuru, Mlolongo, Tigoni, Ongata Rongai, Kitengela, and Ruaka metropolis between July and September," she added.
Ms Hassanali noted that the worsening economic prospects have led many Kenyans to retreat to "far-flung" areas in search of more affordable shelter. As a result, high-end residential developments are struggling to attract tenants, making the business "a losing venture" for landlords.
Apartment rentals have become the most sought-after option, with the average value for a 4-6 bedroom property currently standing at Sh39.1 million, while the average value for a 1-3 bedroom house is Sh14.4 million.
