Ridgeways, Runda Mumwe and Thindigua Record the Highest Real Estate Returns to Investors
Kevin Namunwa  |  Oct 5, 2020

Cytonn Real Estate, the development affiliate of Cytonn Investments, has released their Q3 ’2020 Markets Review.

The report highlights the current state of the real estate sector in terms of uptake, rental yields, capital appreciation, and hence, total investor returns. The report suggests that in the residential sector, apartments registered relatively higher average total returns to investors at 5.4% compared to detached markets at 4.2%.

The retail and commercial office sectors, on the other hand, recorded declines in rental yields to 7.4% and 7.2% in Q3’2020, from 7.8% and 7.5%, respectively in FY’2019.

The land sector recorded an overall annualized capital appreciation of 2.4%, indicating that investors still consider land as a good investment asset in the long term.

Cytonn Real Estate’s Research Assistant, Effie Otieno, talked about the challenges that faced the sector during the period under review. Ms Otieno mentioned lower purchasing power because of loss of jobs and travel restrictions occasioned by the pandemic as some of the major challenges.

“Business restructuring with some firms downsizing, constrained financing for developers, and, the existing oversupply in the commercial office and retail sectors, with a surplus of 6.3 mn SQFT and 2.0 mn SQFT, respectively,” Ms Otieno added.

In the residential sector, price appreciation in the market remained subdued with both detached units and apartments recording declines to (0.1%) during the quarter. Ridgeways, Runda Mumwe, and Thindigwa registered the highest capital appreciation at 3.0%, 2.6, and 2.3%, respectively.

According to the report, Gigiri, Westlands, and Karen were the best performing office nodes in Q3’2020 recording rental yields of 9.0%, 8.1%, and, 8.1%, respectively, attributed to the relatively good infrastructure mainly the road networks easing access to the areas and exclusivity of the areas with high-quality offices thus attracting high- end clients and premium rental prices.

In the retail sector, Westlands and Karen were the best performing nodes recording average rental yields of 9.7%, and 9.3%, respectively, attributed the residents’ high consumer purchasing power with the areas hosting high-end income earners.