Returns on property tripled over the quarter buoyed by rental increases in the semi-detached market in the second quarter of 2018, according to a Hass Consult report on price indices.
Total returns, which comprise of rental yields and property price increases, rose to 11.4 per cent over the quarter, nearly three times the 4.27% that was recorded over the same period a year ago.
The double digit growth in total returns is driven by rent escalations as landlords are taking the opportunity to charge higher rents following a return to confidence in the property market.
Semi-detached houses lead the pack with asking rents increasing by 5.6 per cent over the quarter and 14.3% on an annual basis.
“Landlords are now confident enough to renew rent escalations which had been halted over the last year due to uncertainty. The biggest beneficiaries are landlords who own units in suburbs and satellite towns that have traditionally been semi-detached house markets,” said Hass Consult Head of Development Consulting and Research Ms Sakina Hassanali.
Within Nairobi, Kitisuru led the pack with house rents increasing by 2.7% over quarter while Langata posted the highest rent price increases in the apartment segment at 3.7%.
Tigoni was the best performing satellite town in house rent price increases, increasing by 4.8% in the quarter while Limuru lead the pack on an annual basis with rents increasing by 13.3%.
Ruaka was the top performer in the apartment rental market with asking prices increasing by 3.9% over the quarter and 11.5% on an annual basis.
On the sales market, property prices recorded gains as confidence surged despite the effects of the interest rate caps on dulling demand. Property prices rose by 3.6% over the quarter, levels last seen two years ago.
“It is clear that there is renewed confidence in the market but we are not yet out of the woods as the interest rate caps which have affected liquidity in the market still pose a challenge,” said Ms Hassanali.
Gigiri was the top performer within Nairobi with house prices increasing by 2.7% while Westlands led the apartment price rises up 2% in the quarter.
Within the satellite towns, Ngong Town saw price rises across the board with house prices increasing by 5.8% and apartment prices up 6.9 per cent over the quarter – the highest witnessed in both segments.