The Covid-19 pandemic may have curtailed gains made in various industries across the country, however, land price reports published since March 2020, show this prized asset as having made gains over the period.
Some Nairobi satellite towns have seen land prices grow more than 6 fold in just under 10 years.
These parcels of land can be termed as hot property as their returns over the last few years have been unmatched.
According to the Hass Property Index Quarter 3 report published in March, an acre of Land in Donholm was selling at Ksh68.9 million.
By October 2020, the same piece of property was now priced at Ksh70.3 million. This indicated a Ksh1.4 million spike in just 8 months.
Over the last decade, land prices in Donholm have grown 3.67 fold.
The satellite town of Juja has also recorded a surge, with land prices in the area growing 5.46 fold over the last 10 years. An acre of land currently goes for an average of Ksh14.6 million.
According to the Cytonn H1’2020 Market Review report on the land sector’s performance in the Nairobi Metropolitan Area, there was a reduced supply of development land at affordable prices in areas close to the Nairobi CBD resulting in demand for the same in satellite towns.
This could explain why Kitengela was ranked second in terms of return on investment. Only Donholm beat the satellite town located in Kajiado County that has witnessed 4.45 fold increase in land prices where an acre currently sells at approximately Ksh12.5 million.
Athi River and Loresho both recorded a 3.9 fold hike in land prices over the last decade.
Land prices in low rise residential area recorded a 3.8% capital appreciation in 2020.
This was attributed to the availability of development land in these areas. Additionally, people are attracted to these areas as they are sparsely populated, thus offering exclusivity and privacy.
Unserviced land in satellite towns such as Ruaka also recorded a capital appreciation of 3.8% attributed to the growing demand for land in these areas fueled by the demand for housing by the growing working population as the areas act as 'Nairobi’s dormitory', coupled by the improving infrastructure around the area.
The top 7 areas that recorded the biggest 10-year spikes in land prices as per the latest report were listed as follows:
- Juja 5.46 fold
- Kitengela 4.45 fold
- Loresho 3.90 fold
- Athi River 3.90 fold
- Donholm 3.67 fold
- Tigoni 3.65 fold
- Ruiru 3.52 fold
The annual average is representative of the average price of land for sale in Nairobi covering the 18 highest activity suburbs.
The average value for land has gone from Ksh30.3 million in December 2007 to Ksh188.9 million in September 2020.
Upperhill still holds the top spot in terms of land prices with an acre going for Ksh512.1 million
Some of the changes expected in the industry include the digitisation of the Lands Ministry.
In May 2020, the Ministry of Lands and Physical Planning issued a notice to the public inviting them for public participation on the regulatory impact statement for the proposed Land Transactions (Electronic) Regulations 2020.
If approved, the regulations will guide land processes in the country. We expect this to boost the real estate sector through faster land transactions thus reducing delays experienced by developers during the pre-construction period.