The rich spur burst of activity in Kenya’s high-end housing market

A modern house. PHOTO | CSS

Rich buyers seeking high-end properties are providing some bright spots in Kenyan real estate market largely thanks to the Covid-19 pandemic that emphasises social distancing.

Recent property reviews reveal a burst of new developments, especially in the leafy suburbs of Nairobi and satellite towns that enjoy good connectivity to the Kenyan capital.

According to high-end property developer and manager HassConsult’s latest report, the pandemic jolted many deep-pocketed Kenyans into an overdrive of spending on new projects.

Enkavilla Properties said their ready- to-build plots in Kitengela, Kang’undo and Juja suburbs attracted more buyers than the sub-divided ones.

In its 2020 Quarter Three status update on house pricing, the Kenya Bankers Association said wealthy Kenyans defied the economic fallout from the Covid-19 gloom to snap up high-end properties in the rush out of congested neighbourhoods, especially apartments in Nairobi’s upmarket areas.

“The relatively stronger demand at the top end of the market more than offset the decline in the lower segment, hence providing support for the house price stability,” the KBA survey report said.

Buying land for speculation

Enkavilla’s managing director Meshack Muhoho described the phenomenon as unique, saying Kenyans were no longer buying land for speculation but were keen on building their “one” family units.

“Covid-19 created urgency of owning property where one can manage all spaces. This ensures the family enjoys more space and has private washrooms as well as hand-washing,” he said, commenting on their Kitengela development where they are putting up 50 homes with 200 ready-to-build plots also demarcated within the 28 acre space.

KBA said sales for apartments showed a 63 percent slump in prices, with buyers preferring bungalows and maisonettes which experienced a nine percent and 72 percent rise in sales respectively.

Mr Muhoho said landlords had also reported a surge in demand for developed residential property from families that enjoyed better incomes.

HassConsult said on average, rents for standalone houses increased 2.5 percent in the three months to September, compared to a growth of 0.2 percent in the quarter to June and 0.9 percent in the same period a year earlier.

HassConsult Head of Research Sakinah Hassanali said wealthy and health-conscious middleclass families invested billions of shillings in acquiring houses, further helping property returns to outpace equities and government securities during the pandemic.

The KBA and HassConsult reports showed a nearly four-fold rise in sales and property prices in Nairobi and surrounding satellite towns like Kiambu, Ongata Rongai and Kitengela.

The sales were also informed by falling property prices largely caused by diminished earnings due to Covid-19 related business closures.

KBA said most sales made also rode on reduced property prices by owners and developers attempting to fend off demands from their lenders. Many tried to avert seizure where they agreed to jointly sell the properties.

But rental properties remained largely unoccupied due to high prices as many landlords failed to give their tenants or would-be clients discounts.

“Kenya has weird landlords who would rather retain empty units than drop prices to attract or retain tenants. That is why rental units continue to attract high prices as tenants are looking for affordable units,”she said.

Social distancing rule

Covid-19 has also redefined the real estate space due to the social distancing rule which appears to discourage congested housing units in favour of standalone properties.

KBA, HassConsult and Enkavilla Properties as well as other independent studies show Covid drove sales to Nairobi’s satellite towns of Ngong, Ongata Rongai, Kitengela, Ruaka, Katani, Juja, Ruiru, Thika, Ngoliba and Njiru as well as Tala.

Many owners and property developers now ensure regularly used doors swing either way especially to the kitchen, dining room as well as study rooms while sanitiser dispensers are strategically placed.

Karen, Runda, Ridgeways, Kilimani, Loresho, Parklands, Spring Valley and Muthaiga areas, mostly known for their high rates have also attracted new tenants due to a drop in prices as owners experiencing difficulties in servicing loans opted to downgrade to avoid seizure.

According to HassConsult, the upmarket region had the highest number of properties advertised for sale, revealing a rise in distressed properties across Kenya.

According to HassConsult popular upcountry locations include Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi,Kahawa Wendani, Thika, Mtwapa, Utange, Kitengela, Kiembeni, Nyeri, Likoni,Eldoret, Ruiru, Kilifi,Thika road (Kasarani, Roysambu, Ruaraka), Meru and Bungoma enjoyed the highest sales at 53 percent for all property categories.

Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai, Waiyaki Way (Uthiru, Regen, Kinoo,
Kikuyu, Mbagathi Road, Ngong Road and Langata settled for 32 percent.

Affluent Nairobi suburbs of Kileleshwa, Kilimani, Lavington, Westlands, Spring Valley, Riverside, Milimani (Kisumu), Milimani (Nakuru), Runda, Karen, Garden Estate, Parklands, Ridgeways, Muthaiga, Loresho, Kitisuru, Adams Arcade, Nyali, Mountain View and Nyari reported the least sales at 16 percent.

Nairobi’s most expensive addresses

The quest for Nairobi’s most pricey addresses is a perennial fascination for many.

According to HassConsult’s May 2020 Per House Prices, the allure of prime addresses drove buyers to pay an average price of Sh119.3 million in Gigiri, Nyari estate Sh103.6 million, Runda Sh92.1 million, Karen Sh88 million, Kitisuru Sh84.3 million, Muthaiga Sh80.2 million, Lavington Sh66.7 million, Spring Valley Sh65.6 million and Ridgeways Sh63.3 million.