Investors seeking to buy property, especially three-bedroom apartments are advised to first consider checking out Lavington, where effective demand for sale is increasing as compared to neighbouring locale, Kilimani, whose demand for sale is decreasing.
A study by Data Fintech (DF) shows that between first quarter of 2016 and first quarter of 2017, the median price for buying a three-bedroom apartment increased in Lavington by 9.1% and 5.8% in Kilimani. The estimated price for the three-bedroom unit is Ksh21 million.
The gross return on investment (ROI), which is the accumulation of the rent yield and the property price appreciation, is 11.9% in Lavington and 11% in Kilimani.
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Mr Justus Thuo, a real estate market analyst Data Fintech, points out the difference in rent per month for a three-bedroom apartment in both estates – Ksh100,000 in Lavington and Ksh120,000 in Kilimani – as the major driving force.
“The median rent in Lavington is lower than the median rent in Kilimani yet the quality of the properties is the same so there is a price gap, which is drawing the increasing effective demand in Lavington and a slowdown in Kilimani,” he says.
The same has been seen in the pricing for the units where the median price in Lavington has increased at a faster rate, over the last one year to be at par with Kilimani at Ksh21 million, says Thuo.
The number of listings have decreased steadily in Lavington compared to Kilimani due to the difference in effective demand at 31.7% and 14.7% respectively. The listings are 58 for Kilimani and 41 for Lavington.
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According to the Cabinet Secretary Land & Housing Prof Jacob Kaimenyi, Kenya continues to face a shortage in housing and more than 200,000 housing units need to be established per year to match demand, yet only 50,000 are constructed annually. Due to this uneven demand and supply of residential property, the prices are expected to shoot in 2017, according to a report by Knight Frank released in December 2016.
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