NAIROBI, KENYA, June 12, 2017_ Cytonn Real Estate, the development arm of Cytonn Investments, today released its 2017 Cytonn Nairobi Metropolitan Area Land Report. The report themed “Investment
Grade Real Estate and Land Remain the Best Investment Bet” focused on the
performance of land in the Nairobi Metropolitan Area between 2011 and 2016. It
is based on research conducted in 18 suburbs and 11
satellite towns in the Nairobi Metropolitan Area. The 2017 land research report
comes on the back of real estate development reports released earlier this
year. Investment grade real estate and investment grade land refers to the
investment in real estate and land based on market research and market
fundamentals, as opposed to speculative investments.
According to the report, land prices had a positive growth rate across all areas
in the Nairobi Metropolitan Area, growing with a 5-year Compounded Annual
Growth Rate, “CAGR” of 19.4%, and a 5-year price change of 2.50x over the same
period.
·
Commercial zones such as Kilimani, Upperhill and
Westlands recorded the highest capital appreciation, increasing with a 5-year
CAGR of 24.3%,
·
Satellite towns such as Ongata Rongai, Ruaka and Athi
River recorded a 5-year CAGR of 20.0%,
·
High rise residential areas such as Ridgeways,
Kileleshwa and Kilimani recorded a 5-year CAGR of 17.7%, and,
·
Low rise residential areas such as Spring Valley,
Kitisuru and Karen recorded a 5-year CAGR of 14.6%.
Speaking during the release, Head of Private Equity
Real Estate, Shiv Arora, noted that “the key drivers for the increments in land
prices have mainly been population
growth, rapid urbanisation, improved infrastructure opening up areas for
development, legal reforms easing land transactions and economic growth
increasing disposable income.”
Based
on individual market performance, Athi River, Ongata Rongai, Syokimau-Mlolongo,
Limuru and Dagoretti recorded the highest growth rates with 5-years CAGR above
25%, mainly as they were characterized by higher infrastructure provision than
in the other satellite towns and relaxed zoning regulations.
The
report noted that the land sector is facing
challenges such as inadequate infrastructure in specific areas, multiple land
tenure systems, high land costs and a difficult legal environment characterized
by opacity in the issuance of title deeds, and challenges in land registration
and transfer. The most common trends in the sector over
the last five-years have been: increased speculation, land banking, and value
addition through agri-business.
