30 January 2013

Kenya: Outer City Properties Outdo Mid-Town Belt

Properties in the outskirts of Nairobi have beaten those in the mid-town belt and inner city in capital appreciation in 2012.

The steepest house price rises were recorded in the outer zones of Nairobi, such as the Thika Road corridor, Ongata Rongai and Athi River, according to the Hass Property Index's Suburb Review.

Prices jumped by 22 per cent on Thika Road, 18 per cent in Ongata Rongai and 17 per cent in Athi River. The blue diplomatic zone of Gigiri was the top performing upper income area at 17 per cent.

Most high-end and upper-middle income segments in the mid-town belt - such as Muthaiga North, Lavington, Kileleshwa, Valley Arcade and Westlands - underperformed, dragging down the market.

"Some of these areas have come into full pricing," said Nathan Luesby, the managing director of online property listings platform JengaWeb and consultant for the index.

Sale prices were subdued in the mid-town belt which was previously the most frenetic at 1-2 per cent, the report says.

"Areas that did well in 2011 slowed in 2012. Buyers were looking at the next value proposition, and there was much more emphasis on budget buying," said Jenny Luesby, a consultant for the index.

Muthaiga remained the most expensive suburb for the second year in a row with average sale prices of Sh65 million, a three per cent increase over 2011's Sh63.3 million.

Average sale prices on Thika Road corridor jumped to Sh9.5 million from Sh7.8 million in 2011. Koma Rock remained the most affordable with an average price of Sh4.1 million, rising 14 per cent from 2011's Sh3.6 million.

"The pricing represented a take-off in commuting as a lifestyle choice, with pricing in the city having reached the limits of consumers' spending power," said Sakina Hassanali, HassConsult's head of research and marketing.

"This shift towards residential areas a little further down the ladder echoed the same theme of careful budgeting."

Rents however rose more sharply in emerging upper market residential areas of Spring Valley and Brookside at 14 per cent, and Wispers and Hill View at 13 per cent.

Average rents were Sh172,500 and Sh130,000 in Spring Valley and Brookside.

Tena estate had the most affordable rents in the year at Sh14,200 on average, followed by Koma Rock at Sh16,000. Rents remained unmoved in Ongata Rongai at Sh23,100 in the year.

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