Nairobi growth driven by high demand

Property prices in Nairobi have sky-rocketed due to high demand for housing that has been brought about by the rapid rate of urbanisation. According to a report by HassConsult a local real estate firm in partnership with stanlib, advertised land prices have increased by as much as 800 percent in some Nairobi's fastest growing suburbs. With the most growth reported in the Upperhill neighbourhood, where an acre of land cost an average of KSh470 million the equivalent of $5.01 million.

The report also noted that these high prices are a result of the short supply of land close to key city centre areas. And have also resulted in a reduction in new projects since price of land affects its development potential. This has led to many plots sitting on the market for longer than in previous years. Some developers believe we will likely see some correction in prices, or at least a levelling up of the prices in the coming years.

The short supply of land and high demand for housing units have culminated to a rise in the cost of property sales and rentals. According to the HassConsult report residential property prices have risen by 8.3% year-on-year since 2013, with apartment rising 13.2%.

Official estimates suggest that Kenya's demand for middle-income and affordable housing stands at 200,000 unit annually. The Kenyan Government has shown its commitment to reducing this defecit by pledging to build 300,000 new affordable housing units by 2017

Significant private sector interest is also building up as players see opportunities in these market conditions. Some planned developments include Migaa, a 774acre development located 30km from nairobi in the county of Kiambu, it is being developed by Home Afrika and will include a museum,  hospital, golf course and retail and commercial space. The government is also developing the Konza Tech City located 60km to the south of the capital and will house Tech and Education industries when it is completed. Another major development located in Kiamu county is Tatu City which is a 2500acre mixed use development.

Many believe that with improved infrastructure and good transport links there is a likelyhood that development of these satellite cities and commuter towns will increase in years to come. And will create opportunuty for home ownership for many Kenyans.

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