Demand for land is moving to Kenya satellite towns having posted stronger returns in the first quarter than suburbs, a new survey released by HassConsult has shown.
Satellite towns saw a 2.4 per cent increase in asking prices while suburbs barely moved posting of 0.2 per cent indicating that prices in the 14 satellite towns were more vulnerable to election-related events than their equivalents in Nairobi.
“The swing in prices following stabilization of the macroeconomic and political environment shows there are possibilities for unlocking value in the satellite towns unlike Nairobi where prices remained relatively flat.
“Nairobi prices have been primarily driven by demand from developers and not speculators unlike the satellite towns and a slowdown in prices reflects a subdued housing market that is yet to recover,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult.
Juja was the top satellite town performer with land in the area rising by 7.66 per cent over the quarter while Gigiri was the top performing suburb with prices increasing by 4.8 per cent over the same period.
On an annual basis Donholm was the best performing suburb with land prices increasing by 11.93 per cent over the year while Kitengela was the best performing satellite town with prices increasing by 13.25 per cent over the same period.
Ms. Hassanali added that the plans for massive housing by the Nairobi County government that will see more efficient use of public land has the potential to shift pricing.
“Land in Nairobi contributes a significant portion of the unit cost of a house and by the county government offering developers of affordable housing free land, there is a likelihood of prices easing on the apartment market,” said Ms. Hassanali.
Other Nairobi suburbs that backed the trend of stagnating prices include Lavington and Nyari which posted 1.2 per cent rises in asking prices, a reversal from drops that the two high-end suburbs recorded in the preceding quarter.
Kenya satellite towns have in recent years seen significant investment in housing in what proponents say is conducive environment away from the bustle of Nairobi City areas.