Almost half of the middle class and high-end Nairobi tenants have asked their landlords or real estate agents to slash their rents by 25%-30% due to the economic stress caused by COVID-19. The Hass Consult Property Index covering the three months ended June shows.
The report states that 47% of tenants are citing reduced incomes even as landlords grapple with the headache of finding out which tenants have adversely been affected to warrant even further cushioning.
“COVID-19 has resulted in the closure of many industries across the economy and thereby reducing incomes of
business owners and employees who are in turn exerting pressure on landlords to reduce rents,” says Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult in the report.
The Index also shows that the overall state of the economy is piling downward pressure on asking rents.
During the period under review, Donholm suburb recorded the biggest quarterly drop in rents for houses at 4.8 percent while on an annual basis Kitisuru led the pack with rents reducing by 7.7 percent.
Parklands backed the trend in the suburbs with apartment rents in the area marginally increasing by 2.4 percent over the quarter and 7.1 percent over the year.
In the satellite towns, Mlolongo led the pack with apartment rents falling by 2.6 percent over the quarter and 9.8 over the year while Kiserian and Thika saw gains of 6.7 percent and 10 percent over the quarter and year respectively.
Apartments similarly recorded the strongest growth in rents at 2.2 percent against the overall property rents slight drop of 0.3 per cent.
On the sales front, HassConsult notes that prices have remained relatively flat as developers and other sellers avoid generous discounts on properties or increasing prices as they wait to see how the economy will perform once it is fully reopened.
“This is the first full quarter under COVID-19 showcasing the property market under the government’s strictest social distancing measures which have since been eased. Property prices remain stable as most sellers, presumably those without any urgent cash flow requirements, are avoiding making rash decisions that will cost them in the long run.” said Ms. Hassanali.
Ms. Hassanali added that in some instances the Central Bank of Kenya (CBK) guidelines that are encouraging banks to offer clients moratoriums and renegotiating loan terms have offered some reprieve to developers and others borrowers who had facilities on properties.
Overall prices dropped by 0.2 percent over the quarter but marginally increased by 2.9 percent on an annual basis.
Houses in Muthaiga recorded the highest asking prices over the quarter at 3.6 percent while Riverside recorded the lowest drop with apartment prices marginally reducing by 2.6 percent.
