HassConsult today unveiled land price trends for 2017, revealing that the land prices no longer defy political risk resulting in growth rates flattening as uncertainty gripped the market towards the end of last year.
Land prices in Nairobi’s suburbs increased by 3.32 per cent while asking prices in satellite towns increased by 5.43 per cent in 2017, marking the lowest price appreciation of the asset since the index was launched. Historically land prices have defied the electioneering period as investors in this sector normally adopt a long-term view since the political season is once every five years but the Supreme Court ruling caught even seasoned investors off-guard.
In particular the Supreme Court’s directive that it would order for a fresh presidential election if the poll agency did not carry out a proper election raised the risk of perpetual elections. “Land has traditionally defied political risk which is short-term but the repeat poll introduced a new level of risk that had not been priced in the market.
The wait-and-see approach was prolonged by fears that it could extend even further put a break on activity in the land market,” said Ms Sakina Hassanali, Head of Development Consulting & Research at Hass Consult. Looking at last year Donholm was the best performing suburb with land prices increasing by 12.2 per cent over the year while Kitengela was the best performing satellite town with prices increasing by 16.6 per cent over the same period.
Donholm performance is the result of the suburb opening up following completion of the Outer Ring Road Expansion. The Kitengela suburb is similarly benefiting from expansion of infrastructure projects that will make the area more accessible. At an average asking price of Ksh11.3 million per acre Kitengela still offers an attractive entry point for land investors when compared with other satellite towns such as Ruaka, the most expensive suburb with an acre now going for Ksh83.1 million, making it still attract long-term investors.
In Nairobi Upperhill still remains the most expensive suburb with the asking price for an acre now standing at Ksh. 551 million. Activity in the land market is expected to pick up going forward driven by government-led projects such as the “Big
Four” of which housing is critical.
“The government’s plan to construct at least 500,000 affordable units over the next five
years will spur other private developers to move to areas where these houses will be put up as they seek to take advantage of the supporting infrastructure that will come through such a plan,” said Ms. Hassanali. Ms. Hassanali added that the plan to boost mortgage uptake through the same plan will further develop the overall property sector.