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Investors’ Bet on Nairobi Satellite Towns Pays Off

Apartments in satellite towns have helped service the high demand for affordable rental properties

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Real estate investors in Nairobi’s satellite towns such as Athi River, Ruiru, Kitengela, Syokimau, Juja and Ngong’ are reaping great returns as land and property prices rise steadily, data from the latest HassConsult Index indicates.

Rental prices in satellite towns defied the trend in the city. While the overall rental market declined by 0.5 per cent on average over the last quarter, and by 1.2 per cent over the past year, apartments located in satellite towns posted average rental returns of 3.4 per cent over the quarter and nine per cent annually, respectively.

Apartments in satellite towns have helped service the high demand for affordable rental properties, impacting overall returns for investors.

Nearly all satellite towns posted positive growth in apartment rental pricing, a pointer to rising occupancy rate of apartments – with strong growth among the demographic of  renters with a monthly budget between Ksh25,500 and Ksh50,000.

“This trend is being further boosted by the underperformance of other asset classes such as bonds, equities, and fixed deposits, making these apartments an attractive investment option,” noted Sakina Hassanali, Head of Development Consulting and Research at HassConsult.

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Year-on-year, land prices in satellite towns increased by 8.08 per cent compared to a lower 1.42 per cent annual increase in land prices in the city. Over the quarter, land prices in satellite towns increased by 1.28 per cent.

The increase in land prices was partly driven by speculation. The proposal to extend the Standard Gauge Railway (SGR) to Export Processing Zone (EPZ) in Athi River has fueled speculation leading to a 6.1 per cent increase in land prices in Athi River over the quarter.

Ngong’ was the best-performing town, recording a 6.2 per cent increase in land prices.

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