Market Overview
According to the Hass Property Index for Q3 2023, the Kenyan real estate market has experienced some notable changes in recent months. The average property prices across the market have dropped by 0.5% in the quarter and 1.8% over the past year. This drop indicates a slowdown in price appreciation, which can be attributed to the uncertainty in the Kenyan economic environment.
If you’re considering investing in real estate in Kenya, you’ll want to stay updated on the latest market trends and developments. The Hass Property Index for Q3 of 2023 provides valuable insights into the Kenyan real estate market. In this blog post, we’ll take a closer look at the index and identify the best places to invest in real estate based on the data.
The land and property indexes provided by Hass Consult for the period ending June 2023 offers several key insights about land and built up property prices in Nairobi and its suburbs and satellite towns. Here are the main points :
Nairobi Suburbs Land Prices:
Land prices in Nairobi’s suburbs stagnated with an average 0.1 percent drop in the second quarter of 2023. On an annual basis, land prices in these suburbs increased by 1.2 percent.
Notably, Spring Valley, Donholm, Loresho, and Langata saw double-digit increases in land prices over the year, with Langata experiencing a 3.85 percent increase over the last quarter.
Satellite Towns Land Prices:
Land prices in Nairobi’s satellite towns also showed minimal increases, with a 1.2 percent increase in the second quarter of 2023 and a 5.1 percent increase over the year.
In contrast, Ngong witnessed a bullish increase of 4.7 percent in the quarter and an impressive 20.7 percent increase over the year, which was four times the rate of the increase in the average satellite town.
Factors Impacting Land Prices:
The increase in land prices is attributed to the development potential of the areas. Suburbs with strict development density guidelines tend to have price ceilings, while areas with more flexible density regulations experience higher price growth.
Factors Driving Ngong’s Growth:
Ngong’s remarkable land price increase is explained by factors like improved infrastructure, including the expansion of Ngong Road and the Ngong-Kibiko-Suswa Bypass, which has reduced traffic congestion.
Additionally, the commercial development of Karen has contributed to the growth of Ngong as a strong and promising area in terms of land investment.
We wrote something predicting the rise of Ngong is 2020, if you didn’t see it, read it here.
Investment Performance:
The Hass Land Composite Index reveals that land, particularly in Nairobi Satellite towns, has been a lucrative investment. An investment of Ksh. 1 million in land in Nairobi Satellite towns at the end of 2007 would have been worth Ksh. 10.71 million in 2023.
- In comparison, land in Nairobi Suburbs-18 showed growth, but not as high as land in the satellite towns.
- The performance of land significantly outperformed other asset classes, including property, equities, bonds, savings, and equities.
Comparison to Commodities:
The land index shows, particularly in Nairobi Satellite towns, outperformed several commodities and asset classes, including gold, crude oil, live cattle (CME), equities, and savings. Land has been a solid investment choice over the years.
These insights from the land index provide a comprehensive overview of the state of land prices in Nairobi’s suburbs and satellite towns, highlighting areas of growth and factors influencing price trends. Investors and real estate professionals can use this information to make informed decisions about land investments in the region.
Hotspots for Investment
Despite the overall market slowdown, certain areas in Kenya have shown remarkable growth in both property prices and rental rates. Here are some of the top areas to consider for real estate investment based on the Q2 2023 data:
1. Langata:
Langata has been a standout performer with house prices rising by an impressive 12.8% in the year leading up to Q2 2023. This strong growth trend makes it an attractive destination for real estate investment.
2. Ngong:
Ngong, situated near Langata, has also demonstrated substantial growth in property prices, with an increase of 18% over the same period. This area’s proximity to Langata and the expanding infrastructure upgrades have contributed to its growth as a residential hub.
3. Ongata Rongai:
Ongata Rongai is another area to watch for real estate investment. It posted a remarkable 22% increase in apartment rental prices in the last year, making it an attractive option for rental property investors.
4. Ngong Town:
Ngong Town recorded a 17.6% increase in house rental prices in the last year. The expansion of Ngong Road has contributed to the growth of this area as a residential and commercial hub.
Commercial Growth in Karen
The growth of Karen as a commercial hub has had a significant impact on neighboring suburbs and towns. Karen is known for hosting high-value, low-density housing, but it has also established itself as a commercial center. This has led to the expansion of surrounding suburbs, where resident communities are seeking middle-market housing options.
Final Thoughts
While the Kenyan real estate market has experienced a general slowdown in price appreciation, there are still promising investment opportunities in specific regions. The data from the Hass Property Index for Q3 2023 highlights Langata, Ngong, Ongata Rongai, and Ngong Town as hotspots for real estate investment. Additionally, the growth of Karen as a commercial hub has spurred demand for housing in neighboring areas.
Investors should conduct thorough research, consider their investment goals, and consult with local real estate experts before making any investment decisions. Keep in mind that real estate markets can be dynamic and subject to changes, so staying informed about the latest developments is crucial for making informed decisions in this sector.
The Hass Indexes’ Misses.
Despite showing us that investing in land in Kenya is a solid investment choice, outperforming other assets, the reports missed a few things.
One of the big misses of these reports is that they don’t tell you where next the heat is heading to. I’m sure you’ve ever heard the saying, find out where next people will be buying land next and go there?. That’s the best property investment advise one can actually put to work profitably.
But thankfully Mkaazi Real Etstate Ltd is here to help you do just that. Just like those who followed our prediction in 2020 about Ngong Town are still reaping big.
The second miss is that it only highlighted Nairobi and its metropolitan towns. Granted its the capital of the country and more data points are available. But big return on investment opportunities do exist in other locations away from Nairobi.
Here are the next locations we predict to grow exponentially in the coming months to a year.
Each of these locations have specific drivers for value and growth that we have taken time to research, evaluate and analyzed to confidently predict their growth. A good example is Malindi, we dedicated a whole article in our blog section on this.
We are happy to share the insights with our clientele and those wishing to explore the blue oceans beyond the Kenyan Capital for amazing real estate investment opportunities.
Feel free to write to us on info@mkaazirealestate.com or reach us on +254 763 56 8989 for a quick consultation.
