This archive report was first published on 6 December 2019.
December 6, 2019, marked a significant milestone for the serviced apartment industry in Nairobi, with a surge in bookings from diaspora families returning home for the Christmas festivities.
A survey across the city's affluent suburbs revealed an occupancy rate of up to 80 percent, with annual occupancy rates reaching 70 percent for the rest of the year.
According to Peter Karuga, real estate business development manager at Vaal, serviced apartments have proven to be a lucrative investment opportunity, offering returns of up to 13 percent compared to other sub-sectors that return a mere four to five percent.
‘We have observed the market for the past three years and have seen a commendable trend for serviced apartments. We are investing in a development along Riverside Drive (Divine Apartments) that will rise 11 floors hosting 231 apartments of one and two bedrooms,’ Karuga said.
Realtor Cytonn Investments chief executive Edwin Dande added that serviced apartments command strong rental yields of about 12 percent, compared to residential yields that stand at 4.9 percent. With an additional eight percent of capital appreciation, Cytonn is targeting a total return of 20 percent per annum.
‘Serviced apartments are different from conventional hotels since guests can request meals to be prepared to their tastes. Inside each room, customers have their own kitchen to prepare meals and an electric laundry machine,’ said Mutheu Muna-Mwaniki, CEO of Trianum Hospitality, a consulting and management firm in charge of serviced apartments.
International guests can enjoy almost the same quality of life they enjoy back home, including shopping and airport pickup services. This ensures incoming clients hit the road running upon arrival as they can work from their rooms and attend to meetings within the facility’s boardrooms or be dropped at a meeting venue.
The high demand for serviced apartments has also been fueled by referrals from clients and online booking sites. Incoming scholars on short-term stays prefer furnished apartments due to their convenience and privacy.
Some serviced apartments range from Sh150,000 to Sh400,000 a month for four people sharing, while day clients pay between Sh9,000 to Sh20,000.
