Why real estate investors are moving out of Nairobi
The demand for land has driven its price through the roof, with land increasingly appreciating at a faster rate compared to most of the other assets.
Now for a normal mwananchi to afford a 50 x 100 piece of land, he has to dig deeper into his pockets or risk living with crippling debt.
The price for land notwithstanding, Kenyans are still investing in land more than ever, with most people moving to Nairobi satellite towns where the price of land is still affordable, for now.
This upward move in demand is resulting in a sharp rise in prices for land in these satellite towns.
According to a recent report by a real estate company, land prices in Nairobi’s satellite towns rose by 7.5 percent last year, matching the rise in Nairobi, with Kiserian running well ahead of the average at a growth rate of 25.3 percent.
“Average price per acre disparity between Nairobi (Sh173.5m) and its satellite towns (Sh15.6m per acre) worked to move investor dollars out of Nairobi to reap land investment returns within its satellite towns,” said Head of Research and Marketing at the company.
Speaking to Citizen Digital, Mr Samuel Kabiru, a land investor in Kiserian, said his decision to invest in land was informed by the appreciative nature of land.
“Runda, Kitisuru and other such areas in the city are full and when you find a piece of land it is too expensive that is why I decided to move to Kiserian where land is more affordable,” he said.
According to the the company report, the increased appetite for land in Nairobi’s satellite towns comes in favor of lower average prices per acre at Sh15.6 million, even as land more than quadrupled its price over the last eight years in these areas.
“Due to rising demand, land prices in these satellite towns have now tracked similar growth rates to land in Nairobi at 7.5 per cent over 2015,” she said.
The demand for land in these satellite towns enables future expansion of public and private institutions like universities, private schools, hospitals and co-operative societies.
According to the company, land in Nairobi’s suburbs rose by 9 per cent with Kitisuru, Loresho and Gigiri recording the highest increases in the year at 26.1 per cent, 23.4 per cent and 14.6 per cent respectively in the fourth quarter of 2015.
On average, land prices across all suburbs in the city steadily grew, bucking the sluggish economic growth.