Rent in Nairobi's Lavish Areas Drops

Kevin Namunwa | Sep 15, 2020

Kenyan high-end property’s value has been dropping over the last six months bringing down the value of real estate in the country.

Rent on Kenyan high-end property has fallen by over 6.55% over the last six months. This has been mainly occasioned by foreigners returning to their countries during coronavirus pandemic.

According to Knight Frank’s Africa Residential Dashboard for the first half of 2020, upmarket rental property have been losing tenants as expatriates leave the country pushing a decline in rents.

There has also been an oversupply of housing units with the valuation for the property in lavish Nairobi neighbourhoods falling by 2.9% in the six months to June.

“There has been a surge in the exit of expatriates from the continent due to pre-existing economic challenges but enforced by the Covid-19 pandemic which has resulted in subdued demand in the prime residential sector,” said Tilda Mwai Knight Frank Researcher for Africa said.

Expatriates were forced to leave early as governments were imposing restrictions on foreign travels.

They didn’t want to end up locked away from home for uncertain periods of time.

According to Knight Frank, a quarter of the high-end homes are vacant given the average occupancy of 73% in the six months to June. Knight Frank further said that the decline in both prime residential rents and prices is mainly attributed to the continued oversupply of residential developments, unfavourable economic climate, low liquidity and expatriates returning to their home countries.

The real estate consultants say they expect prime residential rents to decline in the second half of 2020 due to the reduced economic activity, tighter liquidity, continued relocation of expatriates and less disposable income from potential tenants. Prime residential prices are also expected to decline at a slower rate.

The situations is an indication that lower segments of the market remain unserved even as high end real estate runs out of steam.

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