A survey of land prices over the past five years in Nairobi County has revealed that growth in land prices slowed down since 2015. Although competition for space has driven prices upwards since 2012, the rate of growth began decelerating in 2015. Nairobi County recorded the fastest growth in land prices in the period between 2013 and 2015 when land prices grew by an average of 4.26 per quarter.
However, since mid-2015, land prices have risen at a slower rate, averaging a quarterly growth rate of 1.35 per cent. In 2017, land prices grew by a mere 4.25 percent for the whole year leaving the average land price per acre in the county at KSh. 189 million. Further increases were met with resistance as investors sought alternative accessible and cheaper locations without the county.
According to the Hass County land price index analysis however, land prices in the city are poised for further growth owing to the completion of new infrastructure and road expansion projects, which have improved access. As a result, new pockets of development have emerged in those areas, driving demand.
Further, the growing significance of the Nairobi as a regional financial hub which makes it a choice location for most international corporations seeking to tap into the regional markets will also contribute to further price gains in the coming days. Another factor is the probable revision of the interest cap law which could open a much-needed flow of credit to real estate sector.
Kilimani, Upper Hill and Ngara, posted the highest land prices in the county, driven primarily by commercial and high density residential interests. Upper Hill recorded the highest price in the five years for the county as well as in the entire country with the price of one acre rising from KSh. 331.9m in 2012 to KSh. 537m at the end of 2016, an increase of 61.8 percent.
However, even Upper Hill experienced a slow-down in 2017 given the 2.58 per cent rise which represents a drop in real terms to KSh. 551m at the end of 2017. This was for a good part owing to the oversupply especially of office space in the location, giving tenants more ground to bid down the prices as owners scramble for occupancy.
On price growth, Embakasi recorded the highest land price growth in 2017, appreciating by 14.86 per cent. The main catalyst was key infrastructure like the completion of the Outer Ring road which has provided much accessibility in opening up the area. Similarly, the completion of the Southern Bypass resulted in rapid growth in land prices in areas like South C and Lower Kabete.