Kenya: Property Performance in Nairobi and Its Satellite Towns

An aerial view shows the Nairobi city center in Kenya.

After reading this article, you'll wish you had bought a town house in Kitengela or an apartment in Ruaka back in 2016, seeing that the value of property in these areas continues to rise.

For those who did, 2019 is the year they'll reap their investments greatly, and we have the statistics to prove it.

According to CEO Lizzie Costabir, there is a 45 per cent increase in the ratio of property seekers to property listings, implying that there is increased demand and restricted supply.

A report released by the company that focused on three-bedroom apartments and town houses for rent and for sale in the top suburbs in Nairobi and the emerging towns shows the trends.

Rental prices in Lavington went up by eight per cent.


Because of this rise, houses remain vacant for long periods, forcing investors to provide short-term occupancy.

The story is similar for Westlands, where the prices went up by three per cent, from Sh150,000 to Sh160,000, over the past three years.

Westlands is home to major hotel brands which host conferences and meetings, and which attract expatriates.

We have seen growth in the middle and working classes, with more high-income earners choosing to live close to the city centre.

Rental prices in Ruaka grew by three per cent over the last three years. Ruaka has grown because it is home to the biggest mall in East Africa, Two Rivers, as well as Rosslyn Riviera, and Village Market.

It is also located next to the UN offices. Demand for housing in this satellite town continues to grow from the construction of the Western Bypass, which makes transportation easier and faster into the city centre.


In years to come, we expect to see high-end houses and other property types like offices and retail stores coming up in the area.

There was an increased demand for housing in Syokimau. With its proximity to Jomo Kenyatta International Airport, access to Mombasa Road and the train network, Syokimau is attracting both homeowners and developers.

In Kitengela, the price of an apartment for sale increased by three per cent over the past three years while that of town houses was up by 11 per cent.

With the average price of an apartment being Sh8 million, it is actually cheaper to buy an apartment in Kitengela in 2019 against the predicted Sh9.6 million, according to the inflation rates from the Central Bank of Kenya.

Homeowners are investing in Kitengela due to the availability of social amenities such as good schools, shopping malls and hospitals.

Additionally, because it is easier to get manpower and building materials, these satellite towns are good areas to invest in.


If you are thinking of buying an apartment or town house in Athi River, it will be more expensive for you.

As demand goes up in these areas, the value of property rises too. If you want to sell your house, now would be a good time to do so.

Interestingly, when looking at inflation rates compared with rising property prices, we have noticed town house sale prices have a higher value for money compared with apartments in the same area. This is especially evident in Lavington and Riverside.

In places like Juja and Ruiru, there is no major change in current sale prices against the inflation rates.

Whether you want to buy or sell a home, you need to understand the effect of inflation on house prices.

When inflation is high, house prices increase, and vice versa. With reduced inflation rates, general living expenses go down.


Following the price trends we have seen in the market, coupled with changes in demand and supply by area and infrastructure improvements, we foresee the buyers' and sellers' market vary by area.

Largely, we see an increase in supply and demand in areas on the outskirts of Nairobi due to infrastructure improvements, making it easier for commuting to Nairobi while spending less on property respective to Nairobi properties.

Apartment prices are set to increase in high-demand areas of Riverside and Runda, with further town house price increases expected for Karen, Kitengela, and Kilimani.

We foresee stagnant prices in Lavington for apartments and town houses.'s market predictions are based on pricing shifts, economic key drivers, and real estate trends.

However, there may be external factors that determine whether our predictions come to fruition.


In conjunction with our pricing review, the information below will help property seekers and investors make informed decisions to get better returns on their investments.

1. Affordable housing project: During the election period in 2017, most businesses adopted a wait-and-see attitude because they were unsure about what would happen in the country.

After the 2018 political handshake, Kenya saw stability return in most industries including real estate.

The real estate market in Kenya operates in different cycles that usually start after a general election up to the next one.

From election promises to action, the President's "Big Four Agenda" endorses affordable housing, which will make it easier for Kenyans to own homes.

According to Business Wire, this agenda will be further aided by a boom in the cement industry, from the reduction in construction prices across public and private developments.

This will encourage suppliers and local contractors to find innovative ways of implementing the affordable housing project.

2. Borrowers to pay higher interest rates

The courts recently suspended the banking interest rate cap aimed at improving lending terms to consumers.

They will now have to wait for finalisation of the cap in the next 12 months. This will allow regulators enough time to put in the right mechanisms to help consumers.

In the interim, banks will raise their interest rates, which will be a big blow to borrowers who want to get mortgages.

3. Taxes will increase

Big changes take time and toll with ordinary Kenyans bearing the burden of funding the affordable housing project.

Additionally, the housing beneficiaries will have to wait for five years before they can access the money to buy a home.

The government has proposed a 0.5 per cent personal income tax increase, which is to be implemented in March 2019, to help fund the project.

The Ministry of Housing and Urban Development wanted the tax rate to be five per cent. However, the rate could still go up progressively.

Potential homeowners can use these savings to negotiate for better mortgage rates.

Good news is that inflation rates will decrease to a stable five per cent by 2022, according to Statista, after several tumultuous years.

Hopefully, this will reduce the cost of living for many Kenyans and ease the increased tax burden.

4. Inflation rates in Kenya

Statista's predicted stable five per cent inflation rate by 2022 means there will be more disposable income.

This means money which was being spent on commodities such as food, transport, fuel, and clothing can be spent on housing.

At the same time, lenders offer lower interest rates, making it easier to get a reasonable mortgage.

Plateauing inflation indicates market stability, which is a positive sign towards long term growth for Kenya.

5. Encourage government partnerships

The government needs to work hand in hand with private sector industry players in order to propel the real estate sector in Kenya.

There is a scarcity of land to build new projects yet the government still possesses a lot of land which is currently not in use.

In summary, one major focus for 2019 is affordable housing - which will provide low-cost housing to both low and middle-class income earners.

The writer is the CEO

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