Calm returns in Kenya’s property market as rental prices begin to rise
• Asking rental prices in the quarter increase 3.3 per cent after a year of rent price falls. Landlords initiate rent escalations that had been halted as confidence restored in the market • Semi-detached houses see the highest quarterly increase with asking rents moving 5.6 per cent and 14.3 per cent respectively on an annual basis • Asking prices increase by 3.6 per over the quarter and by 5.1 per cent on an annual basis • Despite renewed confidence, the interest rate cap is a hurdle towards the market's full potential • Total returns on let property (capital gain + rental yield) surge to 11.4 per cent per annum buoyed by an improving rental market
HassConsult today unveiled the Hass Property price indices for the second quarter of 2018 showing that total returns on property tripled over the quarter buoyed by rental increases in the semi-detached market.
Total returns, which comprise of rental yields and property price increases, rose to 11.4 per cent over the quarter, nearly three times the 4.27 per cent that was recorded over the same period a year ago.
The double digit growth in total returns is driven by rent escalations as landlords are taking the opportunity to charge higher rents following a return to confidence in the property market.
Semi-detached houses lead the pack with asking rents increasing by 5.6 per cent over the quarter and 14.3 per cent on an annual basis.
“Landlords are now confident enough to renew rent escalations which had been halted over the last year due to uncertainty. The biggest beneficiaries are landlords who own units in suburbs and satellite towns that have traditionally been semi-detached house markets,” said Hass Consult Head of Development Consulting and Research Ms. Sakina Hassanali.
Within Nairobi, Kitisuru led the pack with house rents increasing by 2.7 per cent over quarter while Langata posted the highest rent price increases in the apartment segment at 3.7 per cent.
Tigoni was the best performing satellite town in house rent price increases, increasing by 4.8 per cent in the quarter while Limuru lead the pack on an annual basis with rents increasing by 13.3 per cent.
Ruaka was the top performer in the apartment rental market with asking prices increasing by 3.9 per cent over the quarter and 11.5 per cent on an annual basis.
On the sales market, property prices recorded gains as confidence surged despite the effects of the interest rate caps on dulling demand. Property prices rose by 3.6 per cent over the quarter, levels last seen two years ago
“It is clear that there is renewed confidence in the market but we are not yet out of the woods as the interest rate caps which have affected liquidity in the market still pose a challenge,” said Ms. Hassanali.
Gigiri was the top performer within Nairobi with house prices increasing by 2.7 per cent while Westlands led the apartment price rises up 2 per cent in the quarter.
Within the satellite towns, Ngong Town saw price rises across the board with house prices increasing by 5.8 per cent and apartment prices up 6.9 per cent over the quarter – the highest witnessed in both segments.
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