NAIROBI, Kenya, Oct 22 – Land prices in Nairobi’s satellite towns are offering higher returns for investors compared to Treasury Bills, according to new industry data, driven by an anticipated drop in bond returns and the growing attractiveness of land investments.
HassConsult’s Q3 report shows significant land price growth in satellite towns such as Syokimau, Limuru, and Mlolongo.
An acre of land in these areas saw an increase of between 18 percent and 18.5 percent over the past year, with Mlolongo leading at 18.5 percent, reaching Sh43.2 million.
Syokimau followed with 18.1 percent growth to Sh36.6 million, while Limuru saw an 18 percent rise to Sh23.9 million. Ruiru and Kiserian also recorded notable growth, with 16.8 percent and 16.6 percent increases, respectively.
“Annual price growth of 18% to 18.8% in these towns rivals returns from government bonds and NSE shares,” the report noted.
As of October 17, 2024, the government’s one-year Treasury Bill rate stood at 15.912 percent, down from 16.842 percent in August.
The decline in bond rates follows a recent 75 basis point cut in the Central Bank Rate, bringing it down to 12 percent, with further drops expected.
Land prices in Nairobi’s suburb areas, including Spring Valley, Lavington, Ridgeways, Muthaiga, and Langata, also grew, albeit at a slower pace.
Annual land prices increased by 13.5 percent in Spring Valley to Sh270 million, by 12.6 percent in Lavington to Sh255.3 million, and by 9.2 percent in both Ridgeways and Muthaiga. Langata saw an 8.4 percent rise to Sh85.5 million.
“The leading suburbs in land price growth have become hotspots for apartment and mixed-use developments, driving demand,” said Sakina Hassanali, Head of Development Consulting and Research at HassConsult.
Despite the land price growth, the data showed a decline in rental prices in Q3, reflecting the tough economic environment.
Property sale prices in Nairobi’s suburbs and satellite towns grew by 0.7 percent, down from 1 percent in Q2, while rental prices contracted by 0.6 percent after remaining flat in the previous quarter.
The economic uncertainty, fueled by protests in June and July 2024, dampened the market following strong price growth in late 2023 and early 2024.
