[dropcap]R[/dropcap]esiding in Nairobi is not an issue, the fad is which part of the capital? The city’s residential areas have been segmented according to economic class, from the richest (Runda and Karen) to the low class (Kibera slums).
However, the middle class is on the rise and seemingly, it wants to be associated with the high class who live in the leafy suburbs. The high class residentials are not all accommodative, which has led to the rise of alternative residentials for the class on the rise. Such include Westlands, which has become among the most coveted suburbs in the city, even to the high class.
The ‘wealthy’ who can’t get space in Karen or Runda will often slip into Westlands, which has grown into a small city within a city, having its own malls, retails shops and even banks.
This has attracted more middle-income renters who love its calm and serene residential areas and proximity to the city centre and other outlying regions like Karen, Kilimani and Muthaiga and even Thika Road.
Property developers have responded to the growing demand by building more houses, mainly apartments.
But this increased supply of houses is turning counterproductive as rents drop. This is attributed mainly to an oversupply in commercial property with Westlands which hosts the highest office supply at about 29% of available space in Nairobi.
This has consequently affected the price of property in such areas, and Westlands specifically. A report by DataFintech shows that median sale price for office space in Westlands has declined by 10.3% between the third quarter of 2016 and the third quarter of 2017 due to oversupply.
Rent prices are not doing well either with the median price dropping by 2.5%. This shows that growth supply is outweighing the growth in demand. Despite the drop, renting property has a yield of about 9.9% which is higher than residential property in the area.
Despite the poor performance in sales, the residential market in Westlands has been doing well. According to the data, as of the third quarter in 2017, apartments are the best investment choice, giving both the highest rental yield at 7.7% and overall gross return of 27.7%. The research advises that investors should invest in 3-bedroom apartments in Westlands, which have a rising demand among the mddle class.
Another research conducted by the Hass Property supports the narrative, showing that one to three-bedroom apartments, mostly associated with the middle class earners, account for 55.9% of the properties in the market. Also, apartments account for 40.1% of all properties that are for sale on the market.
Hass further states that the sales price of apartments in Westlands dropped by 2% while the rental prices dropped by 3.2%. This is an indication of dropping demand, or rather oversupply. This seems to be the trend across all Nairobi suburbs according to Hass. Out of the 18 listed suburbs, only seven attained an upward growth of rental prices, and Westlands was not one of them. They include Donholm, Eastleigh, Karen, Kilimani, Parklands, Ridgeways and Upperhill.
Currently, the average sale price for a 1-3 bedroom house in the suburbs is Ksh13.8 million while that of 4-6 bedrooms is estimated at Ksh45.4 million, according to Hass.
This makes the most opportune time to acquire an apartment in the leafy suburbs, before demand goes up, affecting the prices to go up.