A report comparing property prices of satellite towns in the Nairobi Metropolitan area has revealed that land in Athi River is the cheapest in the region.
According to the report titled Nairobi Metropolitan Area Land Report 2018, and Cytonn Weekly, unserviced land in Athi River was sold at Ksh4.1 Million per acre in 2017 with an annual appreciation of 5.6%.
"The best performing Satellite Town was Juja which recorded an annual appreciation of 8.7%, attributable to speculation in the area as investors moved from Ruiru, whose prices have matured.
"The worst performing as Utawala, where prices stagnated as the price growth had in previous years been driven by speculation, speculators have since moved to the new towns along Limuru and Thika Road which are undergoing infrastructural and real estate development. the report reads in part.
The report which highlights the land sector’s performance in the Nairobi Metropolitan Area in 2017 based on annual capital appreciation and makes a comparison to the 6-year growth rate further revealed that land in satellite towns recorded an annual price appreciation of 3.0% in 2017 which was lower than land in the suburbs (4.3%) appreciation.
[caption caption="Land Price Performance of unserviced satellite towns in Nairobi Metropolitan area Source: Cytonn Research"][/caption]
"This is attributable to a decline in speculation activity in 2017, as a result of the growth of some towns such as Ruiru and Ruaka, and as a result of the wait and see attitude adopted by investors over the extended electioneering period," it states.
Commercial areas recorded a 3.4% annual increase in price, lower than both the high rise and low rise residential zones which recorded annual increments of 4.8% and 4.5% respectively.
"Kilimani had the highest annual appreciation rate among the commercial nodes of 7.5%, attributable to its relatively low price compared to the other office nodes, with average prices of Kshs 387 mn per acre against a market average of Kshs 473 mn for the nodes. Riverside recorded a slight decline in prices of 0.5%.
"Prices in Upperhill also corrected with the market recording a 0.5% decline in prices as a result of i) increased land prices over the last 6-years, recording a 16.9% CAGR%, ii) an oversupply of approximately 700,000 SQFT of office space in the node, and iii) traffic congestion into and out of the area that had led to many developers focusing on Kilimani, an upcoming office node with lower supply," it conveys.
[caption caption="Land Price Performance in Commercial zones in Nairobi Metropolitan Area Source: Cytonn Research"][/caption]
The report further revealed that the real estate and construction sectors contribution to GDP increased to 14.1%, an increase of 0.3% points compared to 13.8% recorded in 2016.
However, both sectors slowed down in terms of growth rate, with the real estate sector recording 6.1% growth compared to 8.8% in 2016, and the building and construction sector growing by 8.6% compared to 9.8% in 2016.
"This slower growth rate is attributable to the tough operating environment experienced in the year 2017 following the negative effects of the protracted elections, as well as drought and inflationary pressures that dampened the country’s overall economic growth to 4.9%, from 5.9% recorded in 2016, hence affecting purchasing power of potential clients," the report explains.
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