Land-Price-Index-Q4.2017.Pdf

LAND PRICE INDEX QUARTER FOUR REPORT 2017

Prolonged electioneering period reveals land is no longer immune to political risk

• Land prices for both Nairobi suburbs and satellite towns registered the slowest growth rates since the launch of the indices • Historically land prices have defied political risk but for 2017 the repeat presidential election was unprecedented and added a new level of risk • Land prices grew by the slowest rate in September when the Supreme Court gave the historic ruling calling for a fresh presidential election resulting in uncertainty gripping the market • Nairobi suburbs recorded a 3.32 per cent annual growth in asking prices while satellite towns registered a 5.43 per cent growth rate • Overall land still posted a positive return but prices were flattening towards the end of the year • Donholm was the best performing suburb with land prices increasing by 12.2 per cent over the year while Kitengela was the top performing satellite town with a 16.6 per cent price appreciation

Land Index Highlights:

The Hass Composite Land Index, Nairobi Suburbs Quarter % Change Annual % Change Change From 2007

Nairobi-18 Index Results 0.9% 3.3% 6.23 Fold

Suburb with Highest Quarterly Increase in Land Price Donholm ( +6.2% over last quarter)

Suburb with Highest Annual Increase in Land Price Donholm ( +12.2% over last year)

Suburb with Lowest Quarterly Increase in Land Price Gigiri ( -1.9% over last quarter)

Suburb with Lowest Annual Increase in Land Price Ridgeways ( -0.8% over last year)

The Hass Composite Land Index, Nairobi Satellite Towns Quarter % Change Annual % Change Change From 2007

Nairobi Satellite-14 Index Results 2.7% 5.4% 8.21 Fold

Suburb with Highest Quarterly Increase in Land Price Ongata Rongai (+5.6% over last quarter)

Suburb with Highest Annual Increase in Land Price Kitengela (+16.6% over last year)

Suburb with Lowest Quarterly Increase in Land Price Mlolongo (-1.7% over last quarter)

Suburb with Lowest Annual Increase in Land Price Thika (-4.1% over last year)

HassConsult today unveiled land price trends for 2017, revealing that the land prices no longer defy political risk resulting in growth rates flattening as uncertainty gripped the market towards the end of last year. Land prices in Nairobi's suburbs increased by 3.32 per cent while asking prices in satellite towns increased by 5.43 per cent in 2017, marking the lowest price appreciation of the asset since the index was launched.

Historically land prices have defied the electioneering period as investors in this sector normally adopt a long-term view since the political season is once every five years but the Supreme Court ruling caught even seasoned investors off-guard. In particular the Supreme Court's directive that it would order for a fresh presidential election if the poll agency did not carry out a proper election raised the risk of perpetual elections. “Land has traditionally defied political risk which is short- term but the repeat poll introduced a new level of risk that had not been priced in the market. The wait-and-see approach was prolonged by fears that it could extend even further put a break on activity in the land market,” said Ms Sakina Hassanali, Head of Development Consulting & Research at Hass Consult.

Looking at last year Donholm was the best performing suburb with land prices increasing by 12.2 per cent over the year while Kitengela was the best performing satellite town with prices increasing by 16.6 per cent over the same period. Donholm performance is the result of the suburb opening up following completion of the Outer Ring Road Expansion. The Kitengela suburb is similarly benefiting from expansion of infrastructure projects that will make the area more accessible. At an average asking price of Ksh11.3 million per acre Kitengela still offers an attractive entry point for land investors when compared with other satellite towns such as Ruaka, the most expensive suburb with an acre now going for Ksh83.1 million, making it still attract long-term investors.

In Nairobi Upperhill still remains the most expensive suburb with the asking price for an acre now standing at Ksh551 million. Activity in the land market is expected to pick up going forward driven by government-led projects such as the “Big Four” of which housing is critical. “The government's plan to construct at least 500,000 affordable units over the next five years will spur other private developers to move to areas where these houses will be put up as they seek to take advantage of the supporting infrastructure that will come through such a plan,” said Ms. Hassanali. Ms. Hassanali added that the plan to boost mortgage uptake through the same plan will further develop the overall property sector.

For more information, please contact: Sakina Hassanali, Head of Development Consulting & Research

Quarter Annual Change Nairobi Suburbs Average Value 25 Percentile 75 Percentile Land Index % Change % Change From 2007 Per Acre (KShs)

Donholm 6.2 % 12.2 % 7.45 FOLD 69,200,000 42,400,000 90,700,000 Eastleigh -0.7 % 7.7 % 5.87 FOLD 282,400,000 172,700,000 375,000,000 Gigiri -1.9 % 0.4 % 6.42 FOLD 225,600,000 121,000,000 266,700,000 Karen 0.2 % 5.3 % 7.49 FOLD 58,600,000 52,300,000 65,000,000 Kileleshwa 0.3 % 0.0 % 7.02 FOLD 288,500,000 240,000,000 320,400,000 Kilimani 1.2 % 3.6 % 6.63 FOLD 442,900,000 404,800,000 500,000,000 Kitisuru 3.9 % 3.0 % 5.74 FOLD 79,900,000 66,200,000 90,000,000 Langata -1.0 % 5.9 % 5.47 FOLD 58,900,000 45,000,000 70,000,000 Lavington -0.4 % 0.0 % 5.65 FOLD 234,200,000 200,000,000 270,000,000 Loresho 2.4 % 3.0 % 5.16 FOLD 81,900,000 65,000,000 100,000,000 Muthaiga 5.4 % 11.0 % 5.53 FOLD 146,800,000 100,000,000 195,700,000 Nyari -1.5 % -0.7 % 6.07 FOLD 101,200,000 89,00,000 110,000,000 Parklands 0.9 % 1.5 % 5.32 FOLD 414,000,000 360,000,000 480,000,000 Ridgeways 1.0 % -0.8 % 5.98 FOLD 69,200,000 60,000,000 74,000,000 Runda 1.4 % 6.8 % 6.08 FOLD 84,100,000 70,000,000 96,200,000 Spring Valley 2.4 % 7.2 % 4.32 FOLD 162,100,000 117,000,000 200,000,000 Upperhill 1.4 % 2.6 % 9.18 FOLD 551,000,000 480,000,000 650,000,000 Westlands -0.6 % 2.5 % 5.67 FOLD 415,000,000 350,000,000 506,700,000

Quarter Annual Change Nairobi Satellite Town Average Value 25 Percentile 75 Percentile Land Index % Change % Change From 2007 Per Acre (KShs)

Athi River 2.7 % 4.0 % 9.13 FOLD 11,700,000 4,400,000 16,000,000 Juja 4.8 % 7.2 % 13.12 FOLD 11,400,000 3,500,000 16,000,000 Kiambu 3.0 % 6.4 % 7.65 FOLD 43,900,000 23,000,000 60,000,000 Kiserian 0.3 % 5.0 % 7.31 FOLD 7,300,000 3,000,000 10,000,000 Kitengela 3.8 % 16.6 % 7.41 FOLD 11,300,000 6,300,000 15,000,000 Limuru 5.3 % 0.8 % 10.81 FOLD 20,500,000 10,000,000 30,000,000 Mlolongo -1.7 % 7.1 % 5.09 FOLD 24,600,000 12,000,000 35,000,000 Ngong 3.3 % 3.2 % 6.16 FOLD 19,000,000 12,000,000 24,000,000 Ongata Rongai 5.6 % 2.5 % 8.04 FOLD 18,900,000 9,600,000 24,300,000 Ruaka 3.8 % 6.8 % 7.47 FOLD 83,100,000 68,000,000 104,000,000 Ruiru 3.4 % 6.6 % 9.88 FOLD 23,200,000 12,500,000 32,000,000 Syokimau -1.3 % 9.2 % 6.92 FOLD 21,100,000 17,400,000 26,000,000 Thika -1.5 % -4.1 % 8.79 FOLD 18,000,000 7,200,000 26,400,000 Tigoni 3.9 % 11.3 % 8.67 FOLD 21,600,000 17,000,000 25,000,000

*Price Values rounded to nearest Kshs. 100,000

Land Index Heat Maps

Nairobi-18 Suburbs Change in Prices Since 2007

5.74 FOLD 6.08 FOLD 5.98 6.07 FOLD 4.32 FOLD 6.42 FOLD FOLD 5.53 FOLD 5.16 FOLD 5.32 FOLD 5.65 FOLD 5.67 FOLD 5.87 7.02 FOLD FOLD 6.63 FOLD 7.45 9.18 FOLD FOLD 7.49 FOLD 5.47 FOLD

Nairobi-14 Satellite Towns Change in Prices Since 2007

8.79 FOLD

13.12 10.81 FOLD FOLD 8.67 9.88 FOLD FOLD 7.65 FOLD 7.47 FOLD

6.16 FOLD 6.92 FOLD 8.04 FOLD 5.09 FOLD 7.31 FOLD 9.13 7.41 FOLD FOLD

Hass Land Composite Index SNAP SHOTS: Nairobi Suburbs -18 • The Nairobi Suburbs-18 Land Index is representative 700.0 of Land for Sale in Nairobi covering 18 highest activity 600.0 suburbs 500.0 • Land values have increased by 6.23 fold since 400.0 December 2007 300.0

200.0 x December 2007 = 100

Inde 100.0

- 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Average Land Price SNAP SHOTS: Nairobi Suburbs -18 • The annual average is representative of the average 200,000,000 price of land for sale in Nairobi covering 18 highest 180,000,000 activity suburbs

Sh.s 160,000,000 140,000,000 • The average value for land has gone from 30.3 million 120,000,000 in December 2007 to 188.6 million in December 2017 100,000,000 80,000,000

e Asking Price in K 60,000,000 ag 40,000,000 er v

A 20,000,000 0 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Supply of Advertised Land Donholm SNAP SHOTS: Nairobi Suburbs -18 Eastleigh Gigiri • The Mix is a measure of the percentage that each 1.1% 1.1% 0.9% Karen 3.2% suburb represents in the market for 18 Nairobi 1.7% Kileleshwa 6.5% Kilimani suburbs Kitisuru • Land in Donholm took up 1.1% of the market, Langata 11.7% 30.4% Lavington Eastleigh took up 1.1%, Gigiri 0.9%, Karen 30.4%, Loresho 2.7% Kileleshwa 3.8% Kilimani 6.8%, Kitisuru 3.9%, Muthaiga 3.3% Nyari Langata 4.5%, Lavington 11.3%, Loresho 2.0%, 2.4% Parklands Muthaiga 2.8%, Nyari 2.4%, Parklands 3.3%, 2.8% Ridgeways Runda Ridgeways 2.7%, Runda 11.7%, Spring Valley 1.7%, 2.0% 11.3% 6.8% 3.8% Spring Valley Upperhill 3.2% and Westlands 6.5% respectively Upperhill 4.5% 3.9% Westlands

Hass Land Composite Index SNAP SHOTS: Nairobi Satellite -14 • The Nairobi Satellite-14 Land Index is representative 900.0 of Land for Sale in 14 Satellite towns outside Nairobi 800.0 700.0 • Land values have increased by 8.21 fold since 600.0 December 2007 500.0 400.0 300.0

x December 2009 = 100 200.0

Inde 100.0 - 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Average Land Price SNAP SHOTS: Nairobi Satellite -14 • The annual average is representative of the average 25,000,000 price of land for sale outside Nairobi covering 14 highest activity Satellite towns

Sh.s 20,000,000 • The average value for land has gone from 2.4 million in 15,000,000 December 2007 to 20.1 million in December 2017

10,000,000 e Asking Price in K

ag 5,000,000 er v A 0 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Supply of Advertised Land SNAP SHOTS: Nairobi Satellite -14 • The Mix is a measure of the percentage that each Athi River 1.1% Juja town represents in the market for the Nairobi 14 Kiambu 4.2% 9.6% 6.2% Satellite towns 8.9% Kiserian Kitengela • Land in Athi River took up 6.2% of the market, Juja 5.5% Limuru took up 8.9%, Kiambu 5.5%, Kiserian 5.3%, Kitengela Mlolongo 15.8% 5.3% 19.2% Limuru 4.1%, Mlolongo 1.9%, Ngong 7.1%, Ngong Ongata Rongai Ongata Rongai 8.3%, Ruaka 2.8%, Ruiru 15.8%, Ruaka Syokimau 4.2%, Thika 9.6% and Tigoni 1.1% 2.8% 19.2% Ruiru 8.3% Syokimau respectively. Thika Tigoni 7.1% 1.9% 4.1%

Land as an Investment

SNAP SHOTS: Land Performance vs Commodities The Hass Land Composite Index, Nairobi Satellite-14 900.0 index value was 821.4 outperforming Nairobi 800.0 700.0 Suburbs-18 which had an index value of 623.1, 600.0 compared to Cattle which had a value of 127.9, Gold 500.0 163.0 and Crude Oil worst performing with only 67.6 400.0 index value. 300.0 x Dec 2007 = 100 200.0

Inde 100.0 0.0 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Nairobi Suburbs-18 Nairobi Satellite-14 Gold

SNAP SHOTS:

Land Performance vs Other Asset Classes Kshs. 1 million invested at the end of 2007 would have 10,000,000 been worth KShs. 8.21m if invested in land in Nairobi 8,000,000 Satellite-14, KShs. 6.23m if invested in land in Nairobi 6,000,000 Suburb-18, KShs. 2.28m if invested in property (The Hass Sales Composite Index, All Properties), Kshs. 4,000,000 2.35m if invested in bonds, KShs. 1.22m if invested in 2,000,000 savings and only Kshs. 0.68m if invested in Equities 0 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4

Nairobi Suburbs-18 Nairobi Satellite-14 Property Equities Bonds Inflation