Sustained demand for parcels of land inside Nairobi Metropolitan Area (NMA) satellite towns has paid dividends for land investors as land prices recover from the valuation slump witnessed in early 2019.
According to the 2020 Cytonn Nairobi Metropolitan Area Report covering 12 months through June 2020, land prices rose by an average 1.5 percent from a slump of negative 0.3 percent an year ago.
The growth was largely supported by a growth in the valuation of unserviced land parcels in satellite towns as prices rose by 3.8 percent with an acre of land selling at a mean Ksh.25 million from Ksh.24 million last year.
Tagged as Nairobi dormitories, the demand for real estate assets in satellite towns has continued to soar as many find their valuations attractive when compared to land and property prices in the Nairobi suburbs.
“Growing demand for land within these areas comes as they act as a key dormitory for Nairobi’s working population supported by the availability of resources,” noted the report.
Ruiru led the surge in prices by registering an annualized 6.2 percent capital appreciation rate ahead of Ruaka and Utawala at 5.2 percent and 4.1 percent respectively.
The continued rise of land valuations in satellite towns was closely flanked by a rebound in the prices of land in low-rise residential suburbs such as Karen and Spring Valley which marked resilience from their continued attraction for setting up detached housing units.
Land prices in Karen for instance picked up by 5.6 percent, the highest among low rise residential suburbs.
High-rise residential suburbs and commercial zones meanwhile marked a cool down in prices from reduced demand for development.
Land prices in Riverside for instance plunged by 3.3 percent in the year while valuations in Kileleshwa and Westlands tumbled by 2.6 percent and 1.9 percent respectively.
Increased focus on affordable housing by government and the private sector is expected to serve up more investment opportunities in real estate supported in part by a continued rise in the urbanisation rate and infrastructure development#.
Uncertainities arising from the COVID-19 pandemic are however set to destabilize the market from the accompanying low activity even as players suffer credit constrains from lowered personal incomes.
Legal and digital reforms at the National Land Commission (NLC) and the Ministry are however set to prop the sector’s outlook.