The government needs to look at the underlying bottlenecks in the lands sector if the country is to meet the escalating demand for houses, which is expected to soar this year.
Speaking during the release of the fourth quarter property price indices, HassConsult marketing manager Sakina Hassanali said the government will have to intervene to control prices for housing units which have risen by 535% since 2007.
“When you look at the fundamental issues affecting the cost of houses and land in general such as infrastructure and financing, there is need for policy issues to be addressed and implemented,” she said. “Land that used to cost Kshs32.4M in 2007 will now be sold at Kshs173M, hence need to look at policy issues that can bring the price down.”
According to the results, average piece of land per acre was going for Kshs30M in 2007, but now it costs more than Kshs170M, with commercial and high-density housing driving the pricing. The results reveal that Upper Hill has the most expensive land in the city with an acre going for around Kshs470M. Kilimani follows closely at around Kshs370M an acre. Ironically, land is cheapest in Karen, Lang’ata going for around Kshs45M an acre with Runda coming third.
“Land in Upper Hill is expensive because of its proximity to town, and it’s becoming a financial node in Nairobi. You can buy a small piece of land and build four to five storey floors, but in Karen most of the houses are residential hence no revenue one can get from building a house there,” noted Stanlib’s regional head of business development Felix Gichaga.
HassConsult, a real estate investment company, has been working closely with investment managers Stanlib on the land price index report. According to Stanlib, the galloping land prices in the city are driven predominantly by commercial and high density residential developments.
In most of the suburbs surveyed, land zoning had a major impact on the price of specific acreage with land suitable for high density development fetching far higher prices than land that can only be used for low density housing. Other price-influencing factors were accessibility, infrastructure and desirability.
“The pressure on land prices is caused inherently by limited supply of land close to key city centre clusters,” added Mr Gichaga. The study involved over 10,000 land records in order to understand the pricing trends in each suburb.
