This archive report was first published on 8 May 2020.
As the COVID-19 pandemic continues to spread, landlords in high-end estates are feeling the pinch of declining rental earnings. According to the latest Hass Consult Property Index, rent income from estates such as Runda, Spring Valley, Loresho, Kitisuru, and Lavington fell marginally in the first quarter of 2020.
"Whereas the property market began showing signs of resilience as confidence trickled in, the COVID-19 pandemic will have an effect going forward," said Sakina Hassanali, Head of Research and Marketing at Hass Consult, in a statement published on May 8, 2020.
Ms Hassanali noted that the effects of the pandemic will emerge in the second quarter, with globally, the pandemic causing markets across all asset classes to perform poorly. However, the extent of this effect on the local market will depend on how well the pandemic is managed.
Compared to last year, Kitisuru saw rental yields fall the sharpest by 7.7 per cent, followed by Loresho (7.3 per cent), Spring Valley (6.5 per cent), and Lavington (3.4 per cent). In contrast, some estates such as Gigiri, Kilimani, Langata, and Rigeways recorded a marginal increase in rental yields.
Land prices also fell across both suburbs and satellite towns in the first quarter of 2020, sustaining the decline recorded in previous quarters. Gigiri, Kilimani, Langata, and Upper Hill reported a decline of between 1.6 and 2.8 per cent, while land prices in Thika, Kiserian, and Ruaka also went down in the period under review.
Ms Hassanali warned that in the short term, landlords and agents will be pressured to offer rent discounts and freezes as the stay-at-home orders are extended and economic activity remains low. However, she noted that there could be an opportunity for investors if the situation is well managed and there is a gradual recovery in the economy.
