These areas have continued to record growth of lifestyle communities supported by; i) relatively good transport networks, ii) proximity to social amenities, i.e, presence of malls such as Garden City Mall and Two Rivers Mall, iii) proximity to commercial nodes offering convenience for the working population, and, iv) hosting expatriates and majority of the growing Kenyan middle-class with increased disposable income thus demand for convenient and comprehensive lifestyles.

According to our analysis, lifestyle communities’ average total returns stood at 7.7%, 3.0% points higher than the residential market average of 4.7% according to Cytonn Annual Markets Review 2020. One-bedrooms apartments were the best performing with an average returns of 10.1%, followed closely by two-bedroom apartments at 9.4%, while three and four-bedroom apartments came in at 6.6% and 4.7%, respectively. The good performance of one and two bedroom apartments is supported by their high demand as rental units. The performance of three-bedroom apartments was affected by 0.9% price correction attributable to the slowdown in demand amid reduced disposable income and thus focus on more affordable options. Four bedroom apartments recorded low rental yields averaging 4.2% respectively, attributed to relatively low occupancy rates at 77.0%, compared to the market average at 80.2%. Nevertheless, four-bedroom apartments had the highest average annualized uptake which stood at 21.7% while three, two, and one bedrooms recorded average annualized uptakes averaging 21.3%, 21.2% and 19.1%, respectively. The concept remained resilient recording an average price appreciation of 0.1% despite the tough economic environment

The table below shows the performance of lifestyle communities in the Nairobi Metropolitan Area in 2021;

(All values in Kshs unless stated otherwise)
Nairobi Metropolitan Area Market Performance of Lifestyle Communities 2021
Typology	Average Price	Average Monthly Rent	Average Price per SQM	Average Rent per SQM	Average Occupancy	Average Annualized Uptake	Average Rental Yield	Average Price Appreciation	Average Total Returns
1 bed	10.6 mn	92,500	161,212	1,393	78.3%	19.1%	9.7%	0.4%	10.1%
2 bed	17.5 mn	139,883	154,532	1,072	82.4%	21.2%	9.0%	0.4%	9.4%
3 bed	25.7 mn	176,154	144,422	974	82.9%	21.3%	7.4%	(0.9%)	6.6%
4 bed	66.8 mn	295,000	171,641	720	77.0%	21.7%	4.2%	0.5%	4.7%
Grand Average		175,782	157,952	1,040	80.2%	20.8%	7.6%	0.1%	7.7%
·         The average total returns came in at 7.7% with an average rental yield of 7.6% and an average price appreciation of 0.1% ·         One bedroom units recorded the highest rental yield at 9.7%, followed by two bedroom units at 9.0% ·         The average occupancy stood at 80.2% while the average price per SQM came in at Kshs 157,952

Source: Cytonn Research

On the residential part, the best typologies to invest in would be one-bedrooms followed by two-bedrooms owing to their high returns supported by their high rental returns and resilient unit prices amid reduced transaction volumes in the market. We expect the real estate sector to continue recording increased development of lifestyle communities, however, the tough economic environment, market uncertainty, and the reduced disposable income will continue affect uptake of units within the lifestyle communities in the short term. For more information, please see out topical on Lifestyle Communities