Nairobi residents are increasingly shopping for housing far from the CBD as general market sentiment remains low. According the Hass Property Indices for Q3 of 2019, demand for low middle-income housing in extreme corners of the Nairobi metropolitan area remains high as tenants continue prospecting for cheaper units in response to economic uncertainties and high cost of living.
In the third quarter, residential investors settled for less in prices and rents with asking rents in a number of Nairobi satellite towns recording a drop. Ongata Rongai recorded one of the strongest reductions in asking rents at -6.1%. Athi River, Kiambu, Kitengela, Syokimau and Ngong all recorded reduced rents during the quarter.
Residential prices in satellite towns were on a similar trend with Juja, Kitengela and Ongata Rongai all recording price reductions in the 3rd quarter of 2019. According to the Hass Index, both houses and apartment prices were affected in some locations.
However, satellites towns with newly finished modern units, but with more affordable asking prices, are favourite for bargain hunters who led to increased asking prices for rents in Thika, Limuru, Mlolongo, Tigoni, Ongata Rongai, Kitengela and Ruaka metropolis between July and September.
Thika, which saw a 1.3 per cent rise in asking rent prices in the quarter, was the only satellite town that recorded a double-digit increase in apartment rents on an annual basis as tenants opt for affordability in the tough economic environment.
Asking rents for apartments in Thika increased by 13.3 per cent on an annual basis which is the strongest growth in the satellite towns while Tigoni recorded the strongest growth for house rents over the quarter at 3.5 per cent.
“Asking rents for a modern apartment may cost as little as KSh 23,400 (in Thika), and this bodes well for many tenants who are now preferring affordable units as they take caution to save in the wake of job losses cross all sectors. Notably, as the cost of living soars, the lower middle class is opting to pay slightly more in transport but less in rents,” said Ms. Sakina Hassanali, Head of Research and Marketing at HassConsult.
Houses in Kiserian recorded the lowest drop over the quarter with rents in the area reducing by 4.6 per cent.
Parklands was the best performing suburb with rents in the area increasing by 1.9 per cent over the quarter and 9.3 per cent annually. On the losing end Loresho recorded a -2.7 per cent drop over the quarter and -3.5 per cent over the year.
Overall asking rents dropped by 0.9 per cent over the quarter but marginally increased by 0.8 per cent on an annual basis.