Westlands, Mombasa Road, Upper hill and Nairobi CBD are currently three of the most prime locations for commercial real estate.
Multinationals and big businesses have set up their bases in these locations driving rent and prices over the sky. An acre in Upper hill for instance would go for over half a billion Kenya shillings at current market rates; bonkers.
An investor looking to invest in the three locations may have a little homework to do given the current market dynamics. As always the best return on investment gets the investor. DataFintech performed an analysis comparing data from the Westlands and Mombasa Road areas over the past 12 months between Q4 2016 and Q4 2017.
According to the report, both Mombasa Road and Westlands experienced a drop in sales prices over the last 12 months with Mombasa road recording a 47.3% drop while Westlands recorded a 36.9% drop.
Rent prices in both locations went up during the same period with Westlands recording a 51.6% growth, against Mombasa Road’s 4.2% during the same period. Additionally, one year rental yield for commercial property in Westlands stood at 18.72% , 662 basis points higher than Mombasa Road at 12.10%.
The analysis was based on 17,500 data points collected on various online classified platforms in Kenya and suggests that Westlands still holds the rein on returns in commercial property compared to Mombasa Road.