How US aid cuts are shaping Nairobi’s high-end property prices
According to real estate industry tracker HassConsult, this was the first asking price contraction in two years on the city suburbs, which are a target residential area for highly paid workers with multinationals such as USAID.
Asking prices for homes in Nairobi's upscale suburbs—Muthaiga (-4.9 percent), Nyari (-4.7 percent) and Kilimani (-4.6 percent)—fell in the first quarter of this year attributable to increasing market fears of declining demand.
Analysts are linking the contraction in demand to mass layoffs following the US halt of USAID funding in Kenya, a move that has hit the high-end rental market.
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According to real estate industry tracker HassConsult, this was the first asking price contraction in two years on the city suburbs, which are a target residential area for highly paid workers with multinationals such as USAID.
Within the quarter under review, the US State Department announced the permanent closure of 72 projects affiliated to USAID in Kenya, a move that is estimated to have affected roughly 40,000 jobs across the country.
"In the pricier city suburbs, the fall in asking prices [for residential houses] revealed concerns about a fall in demand after the US cut off funding for its USAID programme and its affiliated programmes in Kenya," HassConsult stated in its market report covering the period between January and March.
Meanwhile, the asking prices for houses in Nairobi's satellite towns such as Juja and Limuru went up by 2.4 per cent on average during the quarter. HassConsult said Juja and Limuru towns stood out with gains of 4.2 and 4.0 per cent in asking prices. All 10 surveyed towns reported price appreciation across all properties, the property tracker noted.
“The improvement of infrastructure and amenities has given satellite towns the convenience that was previously the preserve of suburbs, but at a lower average price point of KES14.46 million per unit compared to KES32.46 million in the suburbs, putting them within reach of a larger buyer pool," explained Ms. Sakina Hassanali, Co-Chief Executive and Creative Director at HassConsult in a statement.
Similarly, asking rents in Nairobi's satellite towns outperformed the suburbs in appreciation during the three months under focus.
Led by Ruiru, Ngong, and Limuru, with rental price growth of 5.3 per cent, 5.1 per cent, and 4.9 per cent, respectively, the satellite towns saw their quarterly rents go up by 1.9 per cent on average.
The company said the upswing was attributable to improving economic conditions, including stable and low inflation in the country, which in turn allowed landlords in satellite towns to raise average asking prices.
