Milliam Murigi @millymur1
Average land prices in the Nairobi Metropolitan Area (NMA) continue to decrease, but prices are rising in satellite towns.
George Wachiuri, Ceo Optiven Limited, says prices continue to increase in satellite towns because of the increased investments in infrastructure, affordable offers and rising demand from middle- and lower-middle classes.
Roads in satellite towns such as Ngong, Limuru Juja and Kikuyu are being tarmacked, with electricity connectivity and other social amenities. “Developers are now selling value added plots which makes once desolate land habitable,” he says.
According to Moses Muriithi of Fanaka Real Estate, construction of bypass roads has helped to open up the satellites town, hence making the land attractive. It should be noted that areas that experience high rate of appreciation are driven by demand. At one point the prices stagnate once demand recovers.
The latest Cytonn weekly report says the NMA recorded a 0.5 per cent decline in the asking prices, a 4.3 per cent points decline compared to the 3.8 per cent growth rate in 2018. The decline was attributed to an overall slowdown in real estate investment activities.
On the other hand, unserviced land in satellite towns such as Ruiru and Limuru registered a 4.1 per cent annual capital appreciation on average, because of the relatively high demand for land fuelled by the State’s affordable housing initiative.
The satellite towns are also acting as Nairobi’s dormitory with the majority of the population moving away from a congested city.
Cytonn says investment opportunity in land is in satellite towns, especially in markets with high returns such as Ruiru and Utawala, which have recorded annual capital appreciation rates of above five per cent in 2019.
However, serviced land in satellite towns recorded a 2.2 per cent annual decline in asking prices, due to decreased demand as buyers are not willing to pay a premium for the services provided, thus opt for unserviced land.
Syokimau- Mlolongo recorded the highest annual capital appreciation of 3.5 per cent driven by the speculative demand brought about by the Standard Gauge Railway (SGR). Ruai recorded the highest decline in prices of 9.4 per cent due to ownership wrangles and recent property demolitions.
