HIGH-END HOME RENTS IN NAIROBI STAGNATE
Asking rents in Nairobi’s high-end residential market have remained steady in the second quarter, continuing a trend recorded in the first three months of the year, the Knight Frank Prime Global Rental Index showed Thursday.
This resulted in an annual rental growth of 1.4 per cent in the year to June, doubling the much softer 0.7 per cent growth recorded by March. The index showed that largely, asking
rents for key tenants such as the diplomatic community and expatriates
in Nairobi look to have reached a ceiling, owing to successive double-digit annual increments over the past few years.
In addition, a number of multinational companies – particularly in the extractive industry — have downsized their regional operations, slowing down demand in the capital’s commercial and residential property markets.
“Not all multinationals have downsized, but the oil and gas sectors and their supporting industries have definitely contracted due to low prices of the commodities in the global markets, and this has affected both prime office and residential property segments,” said Knight Frank Kenya managing director Ben Woodhams.
Coincidentally, reduced demand from such key tenants comes just as Nairobi’s prime residential supply has grown. This has further stabilised rents and landlords are more willing to negotiate.
KNIGHT FRANK INDEX
The Knight Frank Index, which covers prime residential markets in 18 cities, rose by only 0.2 per cent in the year to June, the slowest rate of growth since the first quarter 2010.
On a regional basis, Africa and Europe recorded the strongest rise in prime rents, averaging 5.8 per cent and 1.8 per cent respectively.
“The performance of our Prime Global Rental Index closely mirrors global GDP and with sluggish growth considered ‘the new normal’, the heady days of five per cent annual growth look unlikely to be repeated for some time. This is good news for high-end residential tenants,” said Ms Kate Everett-Allen, Knight Frank’s residential research partner.
Despite the slower pace of annual rental growth, Nairobi climbed to seventh in the index, from 11th in the first quarter, as most global cities slumped.
source: daily nation