Jan 22, 2023

In recent years, Ruaka has become one of the fastest growing satellite towns in the Nairobi Metropolitan Area (NMA), and has become a major centre for Real Estate investment and development. Offering relatively higher returns of up to 7.5%, compared to satellite towns average of 6.9%, as highlighted in our Annual Markets Review 2022. This has also driven a construction boom in Ruaka supported by the growing demand for residential property. Additionally, there has been a shift by investors towards satellite towns attributable to availability of cheaper land for development in these areas, coupled with improved accessibility owing to key infrastructural developments that have unlocked value for investors. In 2022, land prices in satellite towns recorded the highest capital appreciations of 11.1% and 8.0% for unserviced and serviced land respectively, against the 4.3% market average cementing their affordability. Furthermore, infrastructural developments have played a fundamental role in connecting Ruaka to main transport networks, and have also reduced commute time to the city centre thus benefitting home buyers seeking to settle in serene neighbourhoods around away from the city, and at the same time have the convenience of travel time.

Ruaka has become an investor’s paradise, and a thriving hub for Real Estate development in the NMA Real Estate sector. We have been tracking its performance through a series of supplementary research reports. In 2018, we published a research note on the investment opportunity in Ruaka, which highlighted the area’s average total returns to investors at 11.1%, on the back of high rental yields and capital appreciation of 5.3% and 5.8%, respectively. As such, we decided to update our previous market research in Ruaka to determine and analyse new market trends, as well as reaffirm the area’s market performance by covering the following:

1. Introduction,
2. Overview of Ruaka,
3. Market Performance, and,
4. Conclusion and Recommendation.

1. Introduction

Ruaka is a suburb located along Limuru Road within Karuri Municipality in Kiambu County, to the northwest of Nairobi city, and 15.0 km from the Nairobi Central Business District (CBD). Ruaka was historically a pre-colonial rural shopping centre, with the hinterland being utilized for agricultural purposes, which formed part of the former Karuri Town Council local authority area. However, subsequent change of land-use in recent years on the back of continued urbanization paved way for zoning ordinances that allowed for more comprehensive and high-density developments in the area. Today, Ruaka’s housing profile is predominantly comprised of high-rise apartment complexes, owing to the area’s growing middle-income earning population and the need for developers to construct efficiently within the available land. Due to this, we focused our research on Ruaka’s furnished and unfurnished residential apartments market. In order to evaluate the investment opportunity in the area, we assessed the unfurnished apartments’ performance in terms of selling price, rental yield, capital appreciation, total returns and made a comparison with the performance on a year on year basis. In addition, we assessed the furnished apartments’ market performance in terms of monthly rent, occupancy, and rental yield to investors in the Real Estate sector within Ruaka.

2. Overview of Ruaka

Over the years, Ruaka has seen considerable growth in terms of the Real Estate sector, with increased activity in the residential, commercial office, retail, and industrial sectors. This is as a result of improved accessibility to the area on the back of improved infrastructural development, owing to the construction of the Northern and Western Bypasses. This makes the area attractive for investment, by reason of which Cytonn Investments has two residential developments; The Alma and Taraji Heights within Ruaka. Some of the strengths that have continued to drive the growth of the Real Estate sector in Ruaka over the years include:

1. Ample infrastructure: The completion of the Northern Bypass and the expansion of Limuru Road served to greatly improve accessibility in Ruaka and its environs. The upgrade of these roads, in conjunction with the existing Banana-Raini Road, Redhill Road, and Ruaka Hill Road, reduced transit times to the larger NMA, thereby increasing investment activities. Furthermore, these improved roadways connect to major highways such as the Waiyaki Way, Nairobi-Nakuru highway, and the Western Bypass completed in 2022, opening up the area and thereby boosting its Real Estate sector,
2. Accessibility to social amenities: Ruaka has access to attractive amenities such as Windsor Golf Club and Wadi Degla Sporting Club
3. Accessibility to key shopping centers: Ruaka boasts access to some of the best amenities in the country and the Eastern Africa region, including top-of-the-line shopping centers and leisure spaces. One notable example is Two Rivers, which is currently the largest mall in East and Central Africa. Additionally, Ruaka is adjacent to superb shopping centers such as Rossyln Riveira and Village Market, providing even more affordable options for the middle-income residents living in Ruaka who seek high-end amenities, making it a desirable location,
4. Strategic location: Ruaka is strategically located within the NMA, neighboring prime and affluent neighborhoods such as Runda (4.3km), Rossyln (4.2km), Gigiri (6.0km), and Nyari Estate (5.5km). Additionally, it is situated near the United Nations approved diplomatic blue zone. These areas boast of a wide range of prime properties, including high-end residential properties, Grade A office spaces, and prime commercial centers. The presence of foreign embassies and headquarters of international organizations, such as the United States of America, Embassy of Jordan, Italian Embassy, and United Nations, have had a positive impact on property values in Ruaka owing to influx of workers in foreign embassies and headquarters of international organizations, thus creating demand for housing units ,
5. Improved security measures and systems: As Ruaka transformed from a rural area into a rapidly growing urban center within the NMA, the suburb saw an increase in security measures. This is due to the increase in population due to urbanization, leading to more safety needs. Consequently, most developers responded to this demand by building properties with guarded gates, security camera surveillance systems, and electric fences. Additionally, the presence of the Ruaka Police Station and installation of street lights along the major highways and street-ways add an extra layer of security to the area, supplementing the private security measures put in place by investors in the area,
6. Educational institutions: Ruaka hosts a number of both public and private learning institutions such as Simoga Valley Primary School, Castle Academy Ruaka, Gacharage School, and many more. With its proximity to affluent neighborhoods, the area complements with international educational institutions in those regions such as International School of Kenya, Peponi School and Rosslyn Academy Creche International German School Nairobi Montessori Plus Centre.  These schools not only focus on academic development, but also promote the growth of students in areas such as relationships, identities, emotional abilities, and overall well-being, and,
7. Health facilities: The Ruaka area is served by a robust healthcare infrastructure, consisting of a plethora of medical centers that cater to the needs of the residents. Some of the notable hospitals in the area include AAR Healthcare Ruaka, M.P. Shah Hospital, and Gertrude’s Children’s Hospital Ruaka, which are among the leading healthcare providers in the country. This is also doubled up by the presence of numerous public hospitals, private clinics and pharmacies that are readily available to cater to the healthcare needs of the population in the area, making it a suitable residence for many.

3. Market Performance

The vibrant market performance in Ruaka is animated by the area’s constantly growing demand for housing, driven by an expanding population which is a mix of both local middle-income earners as well as foreign residents. According to the KNBS, the larger Karuri area emerged among the top-ten most populous urban areas with a population of 194,342 people in the 2019 Census, registering a 49.6% increase from the 129,934 people recorded in the 2009 Census. Given an annual national population growth of 1.9%, it is projected that the population will be 217,576 people by 2025. As highlighted in our Annual Markets Review 2022, Ruaka was the leading node in terms of unfurnished apartment performance, with average total return of 7.5% against the NMA residential sector average total return of 6.8%.  In addition, the Limuru Road area hosting Ruaka serves as a residence for workers in foreign embassies and headquarters of international organizations, thus creating demand for housing units. Consequently, Limuru Road recorded an average rental yield of 5.8%, though lower than the 6.2% furnished apartments’ average yield according to our NMA Furnished Apartments Report 2022. In 2023, we focused on the performance of residential as well as furnished apartments in the area:

1. Unfurnished Apartments Market

The table below shows the year-on-year comparison in performance for residential apartments in Ruaka;

Cytonn Report: Ruaka Unfurnished Apartments Year-on-Year Performance Summary
Unit Typology	Plinth Area (SQM)	Price per SQM Q1'2022	Price per SQM Q1'2023	Rent per SQM Q1'2023	Occupancy	Annualized Uptake	Rental Yield	Price Appreciation	Total Return
One-Bedroom	60	118,083	121,448	630	75.2%	20.8%	3.9%	5.1%	9.0%
Two-Bedroom	92	99,022	101,291	484	85.1%	15.4%	4.9%	2.2%	7.1%
Three-Bedroom	122	101,852	106,475	503	82.4%	16.3%	4.8%	5.5%	10.3%
Average	102	103,734	107,492	510	82.9%	16.5%	4.8%	4.0%	8.8%

Source: Cytonn Research

The key take-outs from the table above include:

1. Average Total Returns: The average total return for apartments in Ruaka increased by 1.3% points to 8.8% in Q1’2023 from 7.5% recorded in Q1’2022, driven by an average rental yield of 4.8% and a capital appreciation of 4.0%. The apartments’ rental yield reduced by 0.8% points to 4.8% in 2023 from 5.6% recorded in Q1’2022, majorly attributable to a decrease in average asking rent to Kshs 510 from Kshs 559 realized in Q1’2022. The Year-on-Year (y/y) price appreciation increased by 2.1% points to 4.0% in Q1’2023 from 1.9% recorded in Q1’2022, driven by an increase in average apartment selling price to Kshs 107,492 from the Kshs 103,734 realized in 2022, and,
2. Typology Performance: The best performing typology was three-bedroom apartments owing to high average total returns coming in at 10.3% compared to one-bedroom and two-bedroom apartments offering total returns of 9.0% and 7.1%, respectively.

The table below shows the breakdown in performance for the profiled one-bedroom apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: One-Bedroom Unfurnished Apartments Summary
Property	Plinth Area (SQM)	Price per SQM Q1'2022	Price per SQM Q1'2023	Rent per SQM Q1'2023	Occupancy	Annualized Uptake	Rental Yield	Price Appreciation	Total Return
The Alma Phase 1, 2 & 4	51	154,902	166,667	784	66.7%	5.5%	3.8%	7.6%	11.4%
Cascadia Apts	57	154,386	161,404	877		20.3%		4.5%	4.5%
Willow Park Apts	65	96,923	100,000	415	82%	30.0%	4.1%	3.2%	7.3%
Magic Dash Apts	68	102,941	102,941	441	77%	27.7%	4.0%	0.0%	4.0%
Average	60	118,083	121,448	630	75.2%	20.8%	3.9%	5.1%	9.0%

Source: Cytonn Research

The key take-outs from the table above include:

• Average Total Returns: The average total return for one-bedrooms in Ruaka came in at 9.0% in Q1’2023, compared to 11.4% recorded in our previous research in 2018, driven by decrease in rental yields by 0.6% points from 4.5% in 2018. However, the 0ne-bedroom apartments recorded a 4.9% gain in average selling price to Kshs 121,448 in 2023, from Kshs 115,821 recorded in 2018. This is in addition to the 2.8% increase in average selling price from Kshs 118,083 in Q1’2022 attributable to; i) increased demand from young and single professional workers who prefer one-bedroom units than other typologies, which is enough for their shelter needs, and, ii) presence and affordability of the apartment units in Ruaka as compared to its environs such as Runda, and Rossyln, which have no allowances for high-rise apartment complexes in their zoning ordinances.

 The table below shows the breakdown in performance for the profiled two-bedroom apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: Two-Bedroom Unfurnished Apartments Summary
Property	Plinth Area (SQM)	Price per SQM Q1'2022	Price per SQM Q1'2023	Rent per SQM Q1'2023	Occupancy	Annualized Uptake	Rental Yield	Price Appreciation	Total Return
The Alma Phase 1,2,3 & 4	86	143,452	142,500	619	87.7%	3.9%	4.6%	(0.7%)	3.9%
Willow Park Homes	90	93,023	98,837	407	79%	12.9%	3.9%	6.3%	10.2%
Temus	92	100,000	94,444	444	98%	11.1%	5.5%	(5.6%)	(0.1%)
Ruaka ridge	80	86,957	81,522	380	98%	12.3%	5.5%	(6.3%)	(0.8%)
Marigold Apts	97	106,250	112,500	500	84%	14.0%	4.5%	5.9%	10.4%
Palace Apts	97	72,165	72,165	381	82%	7.6%	5.2%	0.0%	5.2%
Eagle parlour	110	92,784	92,784	412	80%	16.6%	4.3%	0.0%	4.3%
Eagle parlour	95	100,000	100,909	455	79%	16.4%	4.3%	0.9%	5.2%
The Enkare	86	85,263	92,632	421	80%	28.7%	4.4%	8.6%	13.0%
Runda View	90	116,279	113,372	640	85%	12.5%	5.8%	(2.5%)	3.3%
Cascadia Apts	90	136,667	161,111	778		25.0%		17.9%	17.9%
Mulberry	91	85,556	88,889	500	87%	9.1%	5.9%	3.9%	9.8%
Magic Dash Apts	100	87,912	93,407	385	83%	28.0%	4.1%	6.3%	10.4%
Nalani Homes	86	80,000	73,000	450	84%	18.0%	6.2%	(8.8%)	(2.5%)
Average	92	99,022	101,291	484	85.1%	15.4%	4.9%	2.2%	7.1%

Source: Cytonn Research

The key take-outs from the table above include:

• Average Total Returns: The average total return for two-bedrooms in Ruaka came in at 7.1% in 2023, 5.2% points decrease from 12.3% recorded in our previous research in 2018, mainly driven by decline in capital appreciation by 3.9% points to 2.2% in 2023, from the 6.1% recorded in 2018. This was on the back of lower annual sales realized, with the average annual uptake rate coming to 15.4% in 2023, compared to 32.4% recorded in 2018. The drop in annual sales is attributed to the overall negative effect of Real Estate sector during the COVID-19 pandemic, bringing a drastic hit on demand for the 2-bedroom units and hence slowed sales. However, with the continuous recovery of the sector from the pandemic, increased business activities, and return to normalcy regarding income levels of most middle-income earners, the 2-bedroom units in Ruaka are witnessing an upward trajectory in demand for uptake. This has consequently affected a 2.3% Y/Y increase in average selling price per SQM to Kshs 101,291 in Q1’2023 from Kshs 99,022 in Q1’2022.

The table below shows the breakdown in performance for the profiled three-bedroom apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: Three-Bedroom Unfurnished Apartments Summary
Property	Plinth Area (SQM)	Price per SQM Q1'2022	Price per SQM Q1'2023	Rent per SQM Q1'2023	Occupancy	Annualized Uptake	Rental Yield	Price Appreciation	Total Return
The Alma Phase 1,2, & 3	119.5	130,544	125,188	460	100.0%	1.8%	4.4%	(4.1%)	0.3%
The Alma (Premium)	127	137,795	125,157	472		20.8%		(9.2%)	(9.2%)
Marigold Apts	150	83,333	83,333	400	79%	13.5%	4.6%	0.0%	4.6%
Temus	107	104,673	107,477	467	79%	9.2%	4.1%	2.7%	6.8%
Runda View	104	103,365	103,365	577	79%	12.5%	5.3%	0.0%	5.3%
Magic Dash Apts	103	92,233	87,379	437	82%	28.3%	4.9%	(5.3%)	(0.4%)
Willow Park Homes	115	89,565	91,304	391	82%	12.9%	4.2%	1.9%	6.2%
Burton Apts	141	92,199	85,106	390	83%	12.1%	4.6%	(7.7%)	(3.1%)
Zuri Ridge Apts	108	64,815	69,444	463	80%	22.5%	6.4%	7.1%	13.5%
Eagle Parlour	131	95,420	96,947	496	80%	16.6%	4.9%	1.6%	6.5%
Morning Star Apts	120	81,667	83,333	375	80%	21.3%	4.3%	2.0%	6.4%
Cascadia Apts	108	135,185	177,819	833		25.0%		31.5%	31.5%
Cascadia Apts	117	143,590	191,674	855		25.0%		33.5%	33.5%
Pearl Court	130	92,308	103,846	462	86%	12.3%	4.6%	12.5%	17.1%
Westlock Creek	148	81,081	84,459	473	80%	11.4%	5.4%	4.2%	9.5%
Average	122	101,852	106,475	503	82.5%	16.3%	4.8%	5.5%	10.3%

Source: Cytonn Research

The key take-outs from the table above include:

• Average Total Returns: The average total return for three-bedrooms in Ruaka came in at 10.3% in 2023, a 0.8% points increase from 9.5% recorded in our previous research in 2018, mainly driven by increase in the capital by 1.7% points to 5.5% in 2023, from 3.8% recorded in 2018, attributable to increase in the average selling price per SQM to Kshs 106,475 in 2023, from Kshs 96,547 recorded in 2018. The three-bedrooms have witnessed increased demand especially from clients with families and working in most of the international organizations and embassies across the environs of Ruaka such as the UN Blue Zone, Runda, Gigiri, and Rossyln. Due to zoning ordinances in the select environs, presence of apartments is limited with the aformentioned areas mainly restricted to detached and stand-alone houses. Ruaka also offers quality three-bedroom apartments at affordable prices for the middle-income earners, especially areas around major shopping centres such as The Two Rivers mall. The increase in selling prices is also at the back of newer apartments entering the market charging in United State Dollar (USD) currency to shield against the Kenyan currency devaluation.

2. Furnished Apartments Market

The table below shows the performance of furnished apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: Ruaka Furnished Apartments Performance Summary
Typology	Unit Size (SQM)	Daily Rate	Monthly Rent	Monthly Rent per SQM	Occupancy	Development Cost per SQM	Rental Yield
Studio	34	3,003	84,073	2,549	57.7%	231,715	6.4%
One-Bedroom	55	4,529	126,824	2,301	61.6%	231,715	6.3%
Two-Bedroom	74	5,879	164,599	2,221	55.7%	231,715	5.5%
Furnished Apartments Average	59	4,787	134,030	2,314	58.6%	231,715	5.9%
The development cost was calculated by taking into account the cost of construction materials, labor, equipment, approval fees, and professional services needed to complete a project within the specific region

Source: Cytonn Research

The key take-outs from the table above include:

1. Average Rental Yield: Furnished apartments in Ruaka recorded an average rental yield of 5.9%, with the monthly rent per SQM coming in at Kshs 2,314, and average occupancy rate of 58.6%, and,
2. Typology Performance: The best performing typology was studio furnished apartments as a result of offering investors the highest rental yield of 6.4%, attributable to investors asking for relatively high monthly rents per SQM of Kshs 2,549 compared to the market average of Kshs 2,314, owing to their relatively smaller unit size averaging 34 SQM, compared to one and two-bedroom furnished apartments with sizes of 55 SQM and 74 SQM, respectively.

The table below shows the performance breakdown for the profiled studio furnished apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: Studio Furnished Apartments Summary
Property	Unit Size (SQM)	Daily Rate	Monthly Rent	Monthly Rent per SQM	Occupancy	Development Cost per SQM	Rental Yield
Rosslyn Studios	30	4,213	117,964	3,932	50.0%	231,715	8.7%
Jiji Poa Studios	35	2,700	75,600	2,160	60.0%	231,715	5.7%
Emerald Apartments	30	2,600	72,800	2,427	60.0%	231,715	6.4%
Almond Apartments	37	2,500	70,000	1,892	60.0%	231,715	5.0%
The Moon Apartments	36	3,000	84,000	2,333	58.3%	231,715	6.0%
Studio Furnished Average	34	3,003	84,073	2,549	57.7%	231,715	6.4%
The development cost was calculated by taking into account the cost of construction materials, labor, equipment, approval fees, and professional services needed to complete a project within the specific region

Source: Cytonn Research

The key take-outs from the table above include:

• Average Performance: Studio furnished apartments in Ruaka recorded an average rental yield of 6.4%, with the average monthly rent per SQM coming in at Kshs 2,549 and average occupancy rate of 57.7%.

The table below shows the performance breakdown for profiled one-bedroom furnished apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: One-Bedroom Furnished Apartments Summary
Property	Unit Size (SQM)	Daily Rate	Monthly Rent	Monthly Rent per SQM	Occupancy	Development Cost per SQM	Rental Yield
The Alma	51	3,477	97,365	1,909	66.7%	231,715	5.6%
Rosslyn Studios	65	5,500	154,000	2,369	60.0%	231,715	6.3%
Stay.Plus Hillcrest	56	4,582	128,296	2,291	50.0%	231,715	5.0%
Penthouse Paradise	50	4,202	117,656	2,353	57.1%	231,715	5.9%
Tulivu Homes	55	3,963	110,964	2,018	66.7%	231,715	5.9%
The Moon Apartments	60	4,000	112,000	1,867	72.2%	231,715	5.9%
Mayweather Suites	55	5,605	156,940	2,853	66.7%	231,715	8.4%
Jalde Heights	55	3,914	109,592	1,993	62.5%	231,715	5.5%
Raha Comforts	48	5,152	144,256	3,005	60.0%	231,715	7.9%
Moon 401	50	4,236	118,608	2,372	60.0%	231,715	6.3%
Moon 401	65	4,706	131,768	2,027	62.5%	231,715	5.6%
House of Kawa	55	5,016	140,448	2,554	54.5%	231,715	6.1%
One-Bedroom Furnished Average	55	4,529	126,824	2,301	61.6%	231,715	6.3%
The development cost was calculated by taking into account the cost of construction materials, labor, equipment, approval fees, and professional services needed to complete a project within the specific region

Source: Cytonn Research

The key take-outs from the table above include:

• Average Performance: One-bedroom furnished apartments in Ruaka recorded an average rental yield of 6.3%, with the average monthly rent per SQM and occupancy rates coming in at Kshs 2,301 and 61.6%, respectively.

The table below shows the performance breakdown for profiled two-bedroom furnished apartments in Ruaka;

All values in Kshs unless stated otherwise
Cytonn Report: Two-Bedroom Furnished Apartments Summary
Property	Unit Size (SQM)	Daily Rate	Monthly Rent	Monthly Rent per SQM	Occupancy	Development Cost per SQM	Rental Yield
The Alma	84	6,500	182,000	2,167	50.0%	231,715	4.8%
Rosslyn Studios	80	7,500	210,000	2,625	60.0%	231,715	6.9%
The Moon Apartments	78	5,000	140,000	1,795	66.7%	231,715	5.3%
Ruaka View	80	5,500	154,000	1,925	50.0%	231,715	4.2%
Shamaris Apartments	70	5,200	145,600	2,080	42.9%	231,715	3.9%
Tulivu Homes	75	5,350	149,800	1,997	55.6%	231,715	4.9%
Kalahari Kalaz	69	5,459	152,852	2,215	50.0%	231,715	4.9%
Junica Apartments	73	6,316	176,848	2,423	58.3%	231,715	6.2%
Stay.Plus Hillcrest	70	6,193	173,404	2,477	60.0%	231,715	6.5%
Irene Homes	70	5,821	162,988	2,328	62.5%	231,715	6.4%
Zawadi Apartments	68	5,825	163,100	2,399	57.1%	231,715	6.0%
Two-Bedroom Furnished Average	74	5,879	164,599	2,221	55.7%	231,715	5.5%
The development cost was calculated by taking into account the cost of construction materials, labor, equipment, approval fees, and professional services needed to complete a project within the specific region

Source: Cytonn Research

The key take-outs from the table include:

• Average Performance: Two-bedroom furnished apartments in Ruaka recorded an average rental yield of 5.5%, with the average monthly rent per SQM coming in at Kshs 2,221 and average occupancy rate at 55.7%.

4. Conclusion and Recommendation

Ruaka’s unfurnished residential apartments market softened in 2023 compared to our last research in 2018, with the total return to investors coming at 8.8% in 2023, registering a 2.3%-points decrease from 11.1% recorded in 2018. This was driven by a 0.5%-points decline in the average rental yield to 4.8% in 2023, from 5.3% recorded in 2018, with the Real Estate sector being one of the worst hit following the COVID-19 pandemic in 2020. However, on a y/y basis, the 8.8% total return in Q1’2023 represented an increase of 1.3% points from 7.5% recorded in 2022, majorly attributable to a 2.1% points increase in capital appreciation to 4.0%, from the 1.9% recorded in 2022. The gain in capital appreciation was driven by increased selling prices, with several developments opting to price their units in United States Dollars (USD) in a bid to shield their profits from Kenyan shilling depreciation as well as inflationary pressures. On the other hand, several other developments registered price corrections on a y/y basis in a bid to stay competitive and retain uptake rates amid a tough economic and operating environment.

The furnished apartments market in Ruaka recorded average rental yields of 5.9% in 2023, 0.3% points lower compared to the serviced apartments average of 6.2% recorded in 2022. This was majorly attributed to Ruaka realizing lower occupancy rates at 58.6% during 2023, compared to the serviced sector market average which stood at 65.8% in 2022. The decline was driven by lower holiday stays during January 2023, as has been in opening quarters of the year. Overall, furnished apartments perform better in Ruaka, offering investors a higher average rental yield at 5.9%, compared to unfurnished apartments with average rental yield of 4.8%. This makes furnished apartments more attractive to investors.

For the investment opportunity in unfurnished apartments, we recommend investing in one and three-bedroom unfurnished apartments which offer the highest returns to investors. Notably, one-bedroom unfurnished apartments sell more in Ruaka, with the annualized uptake coming at 20.8%, compared to Ruaka’s unfurnished apartments’ market average of 16.5%. Additionally, one-bedroom apartments registered higher selling prices and rents per SQM owing to their relatively smaller unit sizes compared to other typologies. In furnished apartments, we recommend investing in studio and one-bedroom apartments owing to closely-tied average rental yields to investors per typology. Notably, one-bedroom furnished apartments recorded the highest occupancy rates at 61.6% compared to Ruaka’s furnished apartments average occupancy rate of 58.6%. This is because one-bedroom furnished apartments attract the highest demographic of young, working-class people and young families within Ruaka that seek short to medium stays, while being more spacious than studio furnished apartments.

The drivers contributing to the growth of the Real Estate sector in Ruaka are; i) ample infrastructure, ii) presence of amenities, iii) strategic location, iv) improved security measures and systems, v) good educational institutions, and, vi) robust healthcare facilities. Therefore, we expect an upward trajectory in performance in terms of selling prices, asking rents and total returns to investors which will continue to place Ruaka as a viable area of investment within Kenya’s Real Estate sector.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication, which is in compliance with Section 2 of the Capital Markets Authority Act Cap 485A, is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor