Gen Z revolt dampens Nairobi’s real estate market
The June/July Gen-Z led protests against the Finance Bill 2024 dampened Nairobi’s real estate market, slowing the strong price growth that was experienced in 2023 and early this year.
While sale prices rose modestly in the three months to September, rental rates fell as uncertainty spread the market.
According to the House Price Index Quarter Three Report 2024 by property tracker HassConsult, the sales prices for all property in the Nairobi suburbs remained unchanged at -0.9 percent in the quarter, while satellite towns witnessed a decline of 0.2 percent, compared to a growth of 2.1 percent in the second quarter.
“The property rental market eased after a strong period of growth between October 2023 and June 2024, when monthly rental price growth averaged at three percent. The market aligned with prevailing tough economic conditions, characterized by protests in June and July,” explained Ms. Sakina Hassanali, Head of Research at HassConsult.
HassConsult said apartments in both city suburbs and satellite towns lagged behind standalone units in price appreciation during the quarter under review.
Seven out of nine suburbs with apartments reported negative price movement, as did six out of nine satellite towns, the survey note states.
Apartments account for the bulk of available units for sale averaging 67.7 percent and letting (62.8 percent) in Nairobi.
“The apartment segment saw some price correction in the period due to increased supply of units, which now account for two thirds of all property available for sale in the market,” said Ms Hassanali.
The price performance at the end of the quarter reflected the general slowdown in the real estate sector coming into the quarter.
Official government data shows that the construction sector GDP contracted by 2.9 percent in quarter two of 2024, compared to a growth of 2.7 percent in the corresponding period in 2023.
With the reduction in inflation and expected fall in interest rates, however, both the rental and sales segments are looking at prospects of recovery in the coming months as consumer purchasing power improves.
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Land prices – the leading locations around Nairobi
Meanwhile, Parklands, which has had a surge of development activity – for both commercial and residential developments in the last two years, led the market with land price increases of 3.4 percent to average Kes434.2 million per acre.
In the same measure, Langata and Kileleshwa also made a strong showing with gains of 2.9 percent and 2.8 percent respectively, indicating that demand is shifting back to areas that can support multi dweller units in a market that still remains price sensitive in a tough economy.
“The leading suburbs in quarterly land price growth have emerged as the city’s hotspots for apartment and mixed-use developments, hence the demand driven price increase,” said Ms. Hassanali.
In Nairobi’s satellite towns, Mlolongo (6.6 percent), Thika (6.3 percent), and Kiserian (4.7 percent), recorded impressive price growth in the second quarter, driven by a mix of attractive pricing levels and upcoming infrastructure development.
Mlolongo continued to enjoy the benefit of easier access to the city via the Nairobi Expressway, with the area’s mix of residential and land industrial developments helping sustain demand for land.
In Thika, the Kiambu County government’s recent announcement of a new masterplan to transform the town into an industrial smart-city, has seen developers race to take up land in anticipation of a potential jump in demand for housing and commercial outlets in the area.
