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Table of Contents
KENYA COUNTY LAND PRICE REPORT ...... 10
APRIL 2018 ...... 10
A. Purpose of Report ...... 10
B. Basis of the Research ...... 10
EXECUTIVE SUMMARY ...... 11
CHAPTER ONE ...... 17
KISUMU COUNTY ...... 17
A. Kisumu County Land Price Trends ...... 17
B. Kisumu County Analysis ...... 17
CHAPTER TWO ...... 22
MOMBASA COUNTY ...... 22
A. Mombasa County Land Price Trends ...... 22
B. Mombasa County Analysis ...... 22
CHAPTER THREE ...... 28
NAKURU COUNTY...... 28
A. Nakuru County Land Price Trends ...... 28
B. Nakuru County Analysis ...... 28
CHAPTER FOUR ...... 34
MACHAKOS COUNTY ...... 34
A. Machakos County Land Price Trends ...... 34
B. Machakos County Analysis ...... 34
CHAPTER FIVE ...... 39
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KIAMBU COUNTY ...... 39
A. Kiambu County Land Price Trends ...... 39
B. Kiambu County Analysis ...... 39
CHAPTER SIX ...... 45
KILIFI COUNTY ...... 45
A. Kilifi County Land Price Trends...... 45
B. Kilifi County Analysis ...... 45
CHAPTER SEVEN ...... 50
KWALE COUNTY ...... 50
A. Kwale County Land Price Trends ...... 50
B. Kwale County Analysis ...... 50
CHAPTER EIGHT ...... 55
NAIROBI COUNTY ...... 55
A. Nairobi County Land Price Trends ...... 55
B. Nairobi County Analysis ...... 55
CHAPTER NINE ...... 60
UASIN GISHU COUNTY ...... 60
A. Uasin Gishu County Land Price Trends ...... 60
B. Uasin Gishu County Analysis ...... 60
CHAPTER TEN ...... 65
KAJIADO COUNTY ...... 65
A. Kajiado County Land Price Trends...... 65
B. Kajiado County Analysis ...... 65
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CHAPTER ELEVEN ...... 70
KENYAN TOWNS: THE HOTSPOTS ...... 70
A. The Five Strongest Climbers in 2017 ...... 70
B. Ngata ...... 71
C. Utange Town ...... 73
D. Kitengela ...... 75
E. Embakasi Town ...... 77
F. Bamburi ...... 79
CHAPTER TWELVE ...... 81
KENYAN TOWNS: THE WORST PERFORMING ...... 81
A. The Five Bottom performing towns in 2017 ...... 81
B. Thika Town ...... 82
C. Gilgil ...... 84
D. Thome ...... 86
E. Naivasha Town ...... 88
F. Ridgeways ...... 90
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List of Tables
Table 1 County Ranking 2017 ...... 14
Table 2 County Ranking 2012 to 2017 ...... 14
Table 3 Summary of Towns in Kisumu County ...... 20
Table 4 Summary of Towns in Mombasa County ...... 26
Table 5 Summary of Towns in Nakuru County ...... 32
Table 6 Summary of Towns in Machakos County ...... 38
Table 7 Summary of Towns in Kiambu County ...... 43
Table 8 Summary of Towns in Kilifi County ...... 48
Table 9 Summary of Towns in Kwale County...... 53
Table 10 Summary of Towns in Nairobi County ...... 59
Table 11 Summary of Towns in Uasin Gishu County ...... 63
Table 12 Summary of Towns in Kajiado County ...... 69
Table 13 Climbers in 2017 ...... 70
Table 14 Worst in 2017 ...... 81
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List of Figures
Figure 1 County Land Prices Comparison...... 15
Figure 2 County Land % Increases Over 5 Years ...... 15
Figure 3 Hass County Land Index ...... 16
Figure 4 Average Land Price - Kisumu County ...... 17
Figure 5 Average Land Price – Overview of Kisumu County ...... 19
Figure 6 Kisumu County Land % Increases Over 5 Year ...... 20
Figure 7 Nairobi County against Kisumu County Comparison ...... 21
Figure 8 Average Land Price - Mombasa County ...... 22
Figure 9 Average Land Price – Overview of Mombasa County ...... 25
Figure 10 Mombasa County Land % Increases Over 5 Year ...... 26
Figure 11 Nairobi County against Mombasa County Comparison ...... 27
Figure 12 Average Land Price - Nakuru County ...... 28
Figure 13 Average Land Price – Overview of Nakuru County ...... 31
Figure 14 Nakuru County Land % Increases Over 5 Year ...... 31
Figure 15 Nairobi County against Nakuru County Comparison ...... 33
Figure 16 Average Land Price - Machakos County ...... 34
Figure 17 Average Land Price – Overview of Machakos County ...... 37
Figure 18 Machakos County Land % Increases Over 5 Year ...... 37
Figure 19 Nairobi County against Machakos County Comparison ...... 38
Figure 20 Average Land Price - Kiambu County ...... 39
Figure 21 Average Land Price – Overview of Kiambu County ...... 42
Figure 22 Kiambu County Land % Increases Over 5 Year ...... 43
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Figure 23 Nairobi County against Kiambu County Comparison ...... 44
Figure 24 Average Land Price - Kilifi County ...... 45
Figure 25 Average Land Price – Overview of Kilifi County ...... 47
Figure 26 Kilifi County Land % Increases Over 5 Year ...... 48
Figure 27 Nairobi County against Kilifi County Comparison ...... 49
Figure 28 Average Land Price - Kwale County ...... 50
Figure 29 Average Land Price – Overview of Kwale County ...... 52
Figure 30 Kwale County Land % Increases Over 5 Year ...... 53
Figure 31 Nairobi County against Kwale County Comparison ...... 54
Figure 32 Average Land Price - Nairobi County ...... 55
Figure 33 Average Land Price – Overview of Nairobi County ...... 57
Figure 34 Nairobi County Land % Increases Over 5 Year ...... 58
Figure 35 Nairobi County v Nairobi-18 Suburbs ...... 58
Figure 36 Average Land Price – Uasin Gishu County ...... 60
Figure 37 Average Land Price – Overview of Uasin Gishu County ...... 62
Figure 38 Uasin Gishu County Land % Increases Over 5 Year ...... 63
Figure 39 Nairobi County against Uasin Gishu County Comparison ...... 64
Figure 40 Average Land Price – Kajiado County ...... 65
Figure 41 Average Land Price – Overview of Kajiado County ...... 68
Figure 42 Kajiado County Land % Increases Over 5 Year ...... 68
Figure 43 Nairobi County against Kajiado County Comparison ...... 69
Figure 44 Average Land Price – Ngata, Nakuru County ...... 71
Figure 45 Average Land Price – Utange, Mombasa County ...... 73
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Figure 46 Average Land Price – Kitengela, Machakos County ...... 75
Figure 47 Average Land Price – Nairobi, Nairobi County ...... 77
Figure 48 Average Land Price – Bamburi, Mombasa County ...... 79
Figure 49 Average Land Price – Thika Town, Kiambu County ...... 82
Figure 50 Average Land Price – Gilgil, Nakuru County ...... 84
Figure 51 Average Land Price – Thome, Nairobi County ...... 86
Figure 52 Average Land Price – Naivasha Town, Nakuru County ...... 88
Figure 53 Average Land Price – Ridgeways, Nairobi County ...... 90
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KENYA COUNTY LAND PRICE REPORT
APRIL 2018
A. Purpose of Report
The purpose of this report is to provide information and statistics appertaining to the Kenya County Land Market, with specific focus on Land Prices across 75 Towns and 10 Counties.
B. Basis of the Research
The research was based on information collected from the field using a bespoke data capture application and our own Hass Index data collection since January 2000. However, only data from January 2012 to December 2017 was used in the report, allowing for five-year trends; calculated using 12 months rolling averages.
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EXECUTIVE SUMMARY
The Hass Consult county land price survey for 2017 has revealed a marked slowdown in land price inflation across the ten counties surveyed in Kenya.
Average land prices rose by 7.37 per cent in 2017, compared with 12.07 per cent in 2016.
A critical factor in the slowdown were the uncertainties that came with the prolonged election, seeing many investors hold off from purchasing until the outcome was clear. In this, land transactions, which require considerable capital outlay and are relatively long-term, are not easily reversible in the event of political instability.
Thus, a delay in closures slowed markets everywhere.
However, a more deep-seated driver for the 2017 slowdown was the scarcity of finance, following the interest rate cap of mid-2016. The regulation came as economic fundamentals were deteriorating and prevented banks from pricing in the increased risks, resulting in a reduction in new private sector and consumer lending.
With funding from financial institutions having previously catered for some 70 per cent of development costs, and 18 per cent of real estate companies connected with financial partners, such as banks and Saccos, the slowdown in credit offerings applied a serious brake to land buying.
The recent discussions on the possibility of abolishing the rate cap are, therefore, key to investors in understanding the future direction and scale of growth of land prices.
The financing gap was, however, felt most acutely in counties where land buying has been driven by the upper and middle classes purchasing plots for dream homes, in that such buying has been predominantly loan-financed.
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By contrast, counties that have recently opened new infrastructure, or have large infrastructure plans underway, appeared largely insulated from the impact of the slowdown in financing, with industrial, commercial, and low-income housing needs driving continued investment.
Indeed, for markets where new infrastructure is expanding their potential, pricing proved resilient and even buoyant through 2017, with prices rising by 10 per cent or more.
Likewise, the country’s pockets of ongoing prosperity maintained strong price growth. Notable in this were Kisumu and Nakuru, which both continue to be fuelled by their local agricultural economies, and further boosted by the influx of finance and business.
Thus, while election uncertainty played a role in suspending purchasing, where the underlying drivers of land price rises were robust, local markets were only marginally dampened.
This was stark in the case of Kisumu, which has been one of the hot zones during electoral tension, but where economic fundamentals overrode election uncertainty to deliver further land price growth of 14.05 per cent during 2017.
The survey has also produced some anomalies, in that it is based on asking prices for properties. In this, individual interviews carried out during the study indicated that in some counties, markets are experiencing spots of deep discounting. Thus, in specific areas, sellers are posting rises in asking prices, but are then willing to accept offers that are far lower, in a disjuncture that was evident to some degree in areas such as Kilifi.
Finally, a pattern that is now emerging at the level of towns and suburbs - with the survey based on data from 75 towns across Kenya for the five-year period - are that the country is now experiencing the first steps into the urban regeneration cycle.
Classically, in urban markets, areas that are initially populated by high-income earners are often, over time, developed in ways that lead to a shift in the mix of the population, with middle income
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earners beginning to move into the area. This can cause flight by the elite, to the next upmarket beauty spot.
As the high-end residents vacate, property becomes further developed, often at higher density, and the area will see an influx of lower income earners. This takes the cycle on a further stage, as middle-income earners also seek to relocate.
This cycle, which usually then later leads to an upcycle of subsequent ‘gentrification’, as such areas are ‘rediscovered’ and redeveloped by a younger generation of middle income earners, has been a feature of all urban towns and suburbs globally, and can play out over decades.
In Kenya, reports of exit by the elite from previously premium areas, such as Nyali and Ridgeways, both of which have experienced heavy development and marked changes in character, would seem to suggest the arrival in the country of some early stages in this urban cycle.
Likewise, the regeneration and rehabilitation of areas such as Embakasi and Donholm in Nairobi’s Eastlands, carry the typical markers of the final stages of the same cycle, where a previously down-market (but once elite) residential area, moves to become readopted by a much younger middle class, beginning a process of rehabilitation, and ultimately rising prices.
For towns or areas moving into such cycles the consequent price corrections can play out over many years and tend to represent deep-seated adjustments rather than temporary phenomena on issues such as election uncertainty or scarce finance.
In view of this array of trend across Kenya’s counties and towns, we have, in this report, provided a summary of the price movements and drivers in each of the ten counties surveyed.
We have also picked out, from the 75 towns surveyed, the five top performers in land price growth, and the five worst performers, all of which suffered price falls during the year.
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Table 1 County Ranking 2017
COUNTIES ANNUAL GROWTH RANKING AVERAGE LAND PRICES 2017 AS AT Q4 2017
KISUMU 14.05% 1 6,967,774 MOMBASA 9.87% 2 49,777,654 NAKURU 9.46% 3 4,582,272 MACHAKOS 8.44% 4 13,285,483 KIAMBU 7.28% 5 32,251,517 KILIFI 6.92% 6 15,655,765 KWALE 6.63% 7 10,021,165 NAIROBI 4.23% 8 189,047,737 UASIN GISHU 3.84% 9 5,231,436 KAJIADO 3.01% 10 9,655,643
Table 2 County Ranking 2012 to 2017
COUNTIES FIVE YEARS GROWTH RANKING
KIAMBU 98.73% 1 KISUMU 82.16% 2 NAKURU 81.81% 3 NAIROBI 68.34% 4 UASIN GISHU 67.07% 5 KILIFI 66.07% 6 KAJIADO 58.56% 7 MOMBASA 53.55% 8 KWALE 52.07% 9 MACHAKOS 50.62% 10
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Figure 1 County Land Prices Comparison
Figure 2 County Land % Increases Over 5 Years
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Figure 3 Hass County Land Index
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CHAPTER ONE
KISUMU COUNTY
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A. Kisumu County Land Price Trends
Figure 4 Average Land Price - Kisumu County
B. Kisumu County Analysis
Kisumu County is in western Kenya, on the shores of Lake Victoria, and has historically functioned as a major centre of East African commerce, dominated, because of its location beside Africa’s largest lake, by fishing and fish processing.
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In 2017, land prices in the county rose by 14.05 per cent, which marked a slowdown from the growth of 18 per cent recorded in 2016, but a relatively subdued one.
The performance within this climb was more volatile, however, with prices rising in the first quarter, falling in the second, rising in the third quarter, and dropping again marginally in the final three months of the year. The third quarter surge was particularly surprising, coinciding with the first election in a county considered a hot zone during election periods, with protests often setting back the region’s development sharply.
However, the real estate sector in Kisumu has experienced a boom in recent years as developers have rushed to cash in on rising housing demand aided by reasonable land prices.
As a result, the average land price for the county closed the year at Sh6.97m per acre, up from Sh3.8m an acre at the end of 2012.
The county has also seen infrastructure developments in hospitality, real estate and shopping malls and has benefitted from devolution, which has drawn people towards some of the county towns as they seek opportunities away from the capital Nairobi.
Kisumu County is also one of the devolved units that has embraced e-construction permits, reducing the time required to gain certification for construction.
Within the county, only Kisumu town was surveyed, posting the strongest 2017 growth rate of the 75 towns surveyed, despite the election jitters.
Businesses thrive in politically stable environments and the riots witnessed in the county before and after the elections sparked memories from the post-election violence experienced in 2007, which created fear among businesses. Despite this, the year delivered further strong rises in land prices based on the county’s outstanding economic fundamentals.
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Within this, the interest rate cap slowed growth to some degree, however, with developers constrained by lack of finances.
Figure 5 Average Land Price – Overview of Kisumu County
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Figure 6 Kisumu County Land % Increases Over 5 Year
Table 3 Summary of Towns in Kisumu County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
KISUMU 2.37% 14.05% 82.16% 7,000,000 4,700,000 8,700,000 COUNTY KISUMU 2.37% 14.05% 82.16% 7,000,000 4,700,000 8,700,000 TOWN
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Figure 7 Nairobi County against Kisumu County Comparison
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CHAPTER TWO
MOMBASA COUNTY
A. Mombasa County Land Price Trends
Figure 8 Average Land Price - Mombasa County
B. Mombasa County Analysis
Mombasa County is home to East Africa’s largest port and the second largest airport in Kenya, Moi International Airport, used by both domestic and international flights. The county is also a well-known tourist destination.
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Its strong international connections, together with a raft of major infrastructure investments, saw the county thrive by comparison to many others, recording a rise in land prices of 9.87 per cent in 2017, taking the average price per acre to Sh49.8m, compared with Sh32.4m at the end of 2012.
The county’s resilience comes in a five-year span where it has recorded an average annual rise in land prices of 8.96 per cent, which represented the third lowest average rate of growth across the ten counties surveyed over the five years.
However, the county’s land prices were amongst the highest at the opening of the survey period, meaning that while average prices in the county only rose from Sh32.4m at the end of 2012 to Sh49.8m by the end of 2017, the county’s land prices remained the second highest after Nairobi’s Sh189m per acre.
Unlike many of the other counties, the slowest growth in Mombasa County was prior to 2015, when prices remained substantially static for two years because of terrorist attacks and fears of violence.
Since 2015, the county’s land prices have risen much more sharply, driven by increased security and investor confidence. Major infrastructural projects in Mombasa have also played a role in stimulating new interest in land buying and development in the county.
These include the construction of the Standard Gauge Railway, the ground-breaking for which saw prices start to appreciate; The Mombasa-Miritini Road, which has seen developers seeking positions, primarily for office developments, along the new road. The expansion of the Airport and Port Reitz roads into dual carriageways to rid them of perennial traffic jams has also sparked new land buying.
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Likewise, the development of a 40-kilometre stretch of the road between Mombasa and Mariakani has seen investors buying sometimes very large parcels of land and putting up warehouses and petrol stations.
Overall, the infrastructure investments have been the primary driver of the renewed surge in Mombasa land prices. But increased interest in high-density residential development has also caused localized pockets of surging land prices.
Within the county, land prices in Nyali and Shanzu have remained the highest, with continuing growth in land prices based on the increasing interest in middle and low-end residential developments.
This entry of budget homes marks a shift in the city’s property market, in the wake of concern by developers that sales of high-end properties were dwindling, as supply overtook demand, and rising awareness that local home owners preferred to buy low cost housing units.
Thus, while Nyali posted one of the lowest average growth rates in land prices over the full five years, at 7.5 per cent, it, nonetheless, closed 2017 with Mombasa County’s highest price per acre at Sh95.7m, up from Sh66.5m per acre at the end of 2012.
The highest land price rises in the county in 2017 were, instead, in Utange, where the average cost of an acre of land rose by 13.12 per cent over the 12 months. Utange has been earmarked by investors for several projects, with an international school having acquired a 20-acre plot to develop a state-of-the-art school complex, and 100 acres identified for a mixed-use development of apartments, bungalows, mansions, flats and commercial centres.
Bamburi also registered rapid growth in 2017, at 12.91 per cent, but growth almost flattened in the fourth quarter, with investors unwilling to close further large deals or take substantial loans during the last half of 2017 when political heat was at its peak. Bamburi was the most affected
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by the elections, with price falls of 0.44 per cent recorded across the last three months of the year.
However, players in real estate in Mombasa project that the property market will rebound following the peaceful elections this month, triggering renewed interest in land investments.
Sales in the property market had stagnated in the run-up to the General Election due to fears of a repeat of the violence that rocked the country after the 2007 disputed poll.
Figure 9 Average Land Price – Overview of Mombasa County
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Figure 10 Mombasa County Land % Increases Over 5 Year
Table 4 Summary of Towns in Mombasa County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
MOMBASA 0.97% 9.87% 53.55% 49,800,000 N/A N/A COUNTY BAMBURI -0.44% 14.50% 83.53% 26,100,000 20,000,000 32,700,000 NYALI 1.36% 6.42% 43.84% 95,700,000 78,800,000 112,800,000 SHANZU 0.86% 11.30% 49.81% 56,300,000 45,000,000 65,100,000 UTANGE 1.25% 17.21% 85.24% 21,100,000 14,400,000 27,100,000
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Figure 11 Nairobi County against Mombasa County Comparison
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CHAPTER THREE
NAKURU COUNTY
A. Nakuru County Land Price Trends
Figure 12 Average Land Price - Nakuru County
B. Nakuru County Analysis
Nakuru County is home to the fourth largest town in Kenya, Nakuru Town, set 160 km north west of Nairobi and serving as the administrative capital of the former Rift Valley Province. It is one of the most cosmopolitan counties in Kenya, sat in the heart of the country’s most productive land
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belt. With the county's weather conducive to large-scale farming, horticulture and dairy farming, food crops grown in Nakuru include maize, wheat, beans, peas, cabbages, tomatoes, kales and carrots. The produce is consumed locally and sold to consumers in neighbouring towns and cities.
The county’s underlying agricultural wealth has seen its land prices rise by an average 12.7 per cent a year from 2012 to 2017 - in a steadier trajectory than most of the other counties, and with the county only marginally impacted by the election slowdown.
In 2017, Nakuru County land prices rose by 9.46 per cent, which was only a slightly lower growth than the 11 per cent annual growth registered in 2016.
Prices were, nonetheless, slowed by the political situation, with strong growth in the first half flattening out in the third quarter, before taking off again in quarter four to post Sh4.5m per acre by year end, up from Sh2.5m an acre at the end of 2012.
Overall the county has the lowest asking price for land of the 10 counties surveyed.
Yet the county is home to the fourth largest urban centre in Kenya, after Nairobi, Mombasa and Kisumu, and is currently experiencing intense activity both by investors and the local government, which is keen to have Nakuru town elevated to a city, which would also stimulate neighbouring towns. The county government embarked on an ambitious plan in 2017 to upgrade the county’s infrastructure, revamping the road network within the town and to other parts of the county. This served to raise land prices in Nakuru town despite the prevailing economic and political climate.
Land prices in other parts of the county, meanwhile, rose as investors sought better pricing still, with good access to the county’s central town. Additionally, the rising population has created sustained demand for land, alongside an inflow of both local and international companies which have continued to improve the county’s economy. Diplomats posted to Kenya who have decided to develop and settle in the country have also created a continuous demand for land in Nakuru.
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Within the county, land prices in Nakuru, Ngata and Naivasha towns have remained the highest, driven primarily by commercial and high density residential developments.
The price per acre in Nakuru town itself reached Sh12.4m by the end of 2017, up from Sh7.0m at the end of 2012, and Sh11m at the end of 2016, showing a steady growth rate.
In Ngata and Naivasha towns the average asking prices per acre by the end of 2017 were Sh6.4m and Sh4.9m respectively.
But of the 75 towns surveyed, Ngata town recorded the fastest growth in 2017, with prices rising by 20.66 per cent.
Investors have flocked to Ngata, located some 8 km and only 12 minutes from Nakuru town, based on its far lower average land price per acre and more serene environment for residential homes.
With the second phase of the 120km SGR already underway from Nairobi to Naivasha, speculation is set to raise the land prices in all the areas that it will pass through. Within Nakuru County, these areas include Mai Mahiu, Longonot and Naivasha.
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Figure 13 Average Land Price – Overview of Nakuru County
Figure 14 Nakuru County Land % Increases Over 5 Year
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Table 5 Summary of Towns in Nakuru County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
NAKURU 3.67% 9.46% 81.81% 4,600,000 N/A N/A COUNTY GILGIL 0.53% -1.87% 88.86% 2,200,000 800,000 2,800,000 LAKE 1.29% 6.93% 80.20% 1,500,000 1,200,000 2,000,000 ELEMENTAITA
LONGONOT 4.11% 11.23% 69.40% 3,500,000 2,100,000 4,800,000 GATE MAI MAHIU 0.65% 8.01% 52.96% 3,000,000 2,000,000 3,600,000 NAIVASHA 0.89% -1.12% 114.81% 4,900,000 2,400,000 6,000,000 TOWN NAKURU 4.72% 12.47% 77.04% 12,400,000 6,400,000 16,000,000 TOWN NGATA 5.21% 20.66% 84.46% 6,400,000 4,2000,000 8,800,000 NJORO 7.64% 4.58% 100.02% 2,600,000 1,200,000 3,600,000
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Figure 15 Nairobi County against Nakuru County Comparison
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CHAPTER FOUR
MACHAKOS COUNTY
A. Machakos County Land Price Trends
Figure 16 Average Land Price - Machakos County
B. Machakos County Analysis
Machakos county borders Nairobi and Kiambu counties and relies on subsistence agriculture that is concentrated on maize and drought-resistant crops such as sorghum and millet that are suitable for the area's semi-arid climate.
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From 2012 to 2017, the county’s land prices have risen by an average of 8.54 per cent a year, with the fastest growth reported in 2013, at 22.89 per cent, as the county moved to reposition itself as an urban option.
In 2017, growth was notably more subdued, at 7.2 per cent, based on stronger price growth in the first half, ahead of some slowdown. By year end, the average price per acre had consequently climbed to Sh13.3m, compared with Sh8.8m an acre at the end of 2012.
In this price rise, devolution has been the main driver. After the 2013 general election, Machakos County government invested considerable efforts in marketing the county as a business and investment destination. Road construction has been high on the county’s agenda since devolution, with the county tarmacking an extra 45 km of roads within the last 5 years, representing the greatest length of tarmac roads to be completed across all counties.
The county’s move to rapid economic growth has also been attributed to its proximity to Nairobi, at 64 km, which has positioned it as a lower cost alternative for investors. Its location some 30 minutes from the Jomo Kenyatta International and situation along the Mombasa – Kampala highway have also contributed to its rise as a strategic location.
Within the county, Kitengela, Kantafu and Machakos town have registered the fastest growth in land prices, benefitting from improved infrastructure and relatively affordable land.
Mlolongo, despite posting one of the slowest average annual growth rates over the five years, has maintained its position of asking the highest land prices in the county, at an average of Sh20.5m per acre at the end of 2012, rising to around Sh22.9m by the end of 2016, and Sh24.6m by the end of 2017.
The year 2016 however was a tough year for the county, with asking prices taking a dip driven by falling prices in Mlolongo and Athi River due to traffic congestion on the roads accessing the area. The two places had risen rapidly as a strong choice for people working in the capital due to their
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cheaper housing. But the lengthening traffic snarl-ups along the Mombasa Road towards Nairobi began to see tenants moving to more accessible locations. The consequent slowdown in the uptake of housing units and falling rental property occupancy rates have led to a revision in land prices in these areas.
By contrast, Kitengela land prices grew relatively strongly in 2017, recording the sharpest growth in the county, at 16.59 per cent.
Syokimau and Kantafu also registered rapid price growth across the year at 9.15 per cent and 8.82 per cent, driven by strong demand on relatively favourable land prices and improved infrastructure.
However, in the third quarter of 2017, all but one of the county’s towns took a hit on prices, with Athi River the most affected, recording a price drop of 1.91 per cent in the three months. Only in Kantafu was the highest growth of the year recorded in the third quarter, at 4.62 per cent.
This land price decline was in large part due to election uncertainty, with fears that the situation could be prolonged putting a brake on activity in the land market.
However, during 2017, the county announced a new Machakos City that has been allocated more than 2,000 acres, designed around a central business park. The city will also host dozens of urban amenities, a recreational park, and government offices.
With the county government currently issuing allotment letters to dozens of investors, a degree of speculation is expected to further drive up the value of land in the county from 2018.
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Figure 17 Average Land Price – Overview of Machakos County
Figure 18 Machakos County Land % Increases Over 5 Year
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Table 6 Summary of Towns in Machakos County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
MACHAKOS 0.41% 8.44% 50.62% 13,300,000 N/A N/A COUNTY ATHI RIVER 2.66% 3.99% 80.75% 11,700,000 4,400,000 16,000,000 KANTAFU 2.49% 8.82% 108.49% 3,200,000 2,400,000 4,200,000 KITENGELA 3.78% 16.59% 121.97% 11,300,000 6,300,000 15,000,000 MACHAKOS 3.05% 6.42% 62.62% 7,800,000 3,600,000 10,400,000 TOWN MLOLONGO -1.72% 7.15% 19.80% 24,600,000 12,000,000 35,000,000 SYOKIMAU -1.25% 9.15% 45.54% 21,100,000 17,400,000 26,000,000
Figure 19 Nairobi County against Machakos County Comparison
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CHAPTER FIVE
KIAMBU COUNTY
A. Kiambu County Land Price Trends
Figure 20 Average Land Price - Kiambu County
B. Kiambu County Analysis
Kiambu County is in the Central Highlands of Kenya in the former Central Province, close to Kenya's capital, Nairobi. It is a leading and innovative commercial hub that has been driven principally by agriculture, with most of its residents having been small scale farmers growing tea and coffee, sat beside several large-scale coffee and tea farms serviced by local industries. In
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recent years, however, the county has emerged as a satellite area to Nairobi and undergone intensive development.
Thus, of the ten counties surveyed, Kiambu County has recorded the most rapid growth in land prices from 2012 to 2017, at an average 14.72 per cent a year. However, the sharpest growth was during 2016, when prices rose by 26.5 per cent.
Growth was far more moderate across 2017, at 7.3 per cent.
In 2017, growth in the county’s land prices even dipped slightly in the third quarter of the year, but picked up again in the final quarter, to reach an average Sh32.3m an acre by the close of Q4, up from Sh16.2m an acre at the end of 2012.
The county’s exceptionally strong price growth, and maintained rises during the election year, continue to be driven by the search for cheaper land in relatively proximity to Nairobi, which is just 16km away.
With land prices in Nairobi now averaging Sh189m an acre, investors are increasingly searching for alternatives with reasonable access to the city, but lower prices and fewer issues of congestion.
Within the county, land prices in Ruaka, Kiambu town and Kahawa Sukari have risen most rapidly, as all three areas move towards satellite status to Nairobi, and, to some degree, form a continuum in the city’s outwards expansion.
Ruaka, which now extends from the outer edges of Nairobi county, continued to record the highest land prices in the county, with an acre that cost an average of Sh43.9m at the end of 2012, selling for around Sh77.8m by the end of 2016, and an average Sh83.1m by end-2017.
But price growth slowed in the town, to just 6.8 per cent in 2017.
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Since the Northern Bypass construction, which opened in stretches from 2012 onwards, the face of Ruaka has changed completely, from a tiny, effectively rural, town, to a large urban conurbation, thanks to the ease of access from Mombasa Road via the bypass, as well as via Limuru Road. This has triggered waves of housing developments, many of them high density.
However, with the town now suffering from its own issues of congestion and land availability, the next wave of investments has moved further afield.
As a result, the most rapid land price growth in the county in 2017 was in Ndenderu, where prices rose by 13.45 per cent across the year, driven substantially by a sharp jump in prices in the town in the second quarter. The town was previously ignored by developers due to insecurity but has recently gained traction with buyers due to its improved security and the rising congestion in other parts of Nairobi and Kiambu.
Kahawa Sukari and Tigoni also registered rapid growth for the year, at 11.55 per cent and 11.32 per cent, with Tigoni witnessing the highest price climb in the first quarter of 2017, because of the recent upgrade of the Ruaka-Banana-Limuru Road, the previously poor state of which had hampered the town’s progress.
In June 2017, Kiambu County government through the land, housing and physical planning department announced its intention to regulate land use to boost food security. This was due to concerns at the pace at which investors are turning farmland into real estate developments. The shift has been sharp, with agricultural land accounting for 64.2 per cent of Kiambu’s land in 2002, but just 35.2 per cent by 2014.
At the same time, the proportion of built up land in the county has risen from 15.5 per cent in 2002 to 43.1 per cent by 2014.
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The new land regulations triggered an array of land price falls across the county in the third quarter of 2017, with prices in Ruiru falling by 3.5 per cent, in Juju by 5 per cent and in Limuru by 5.7 per cent.
Thika town and Tigoni also experienced slight declines of 1.7 and 0.6 per cent respectively which shows that land for real estate commands a higher price than land meant for agricultural use in the region.
However, the impact of the land regulation is still unclear, and the consequent price falls in 2017 were caused largely by investors holding back for clarification from the county government as to how this will affect the award of change-of-use certifications.
Figure 21 Average Land Price – Overview of Kiambu County
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Figure 22 Kiambu County Land % Increases Over 5 Year
Table 7 Summary of Towns in Kiambu County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
KIAMBU 2.55% 7.28% 98.73% 32,300,000 N/A N/A COUNTY JUJA TOWN 4.84% 7.23% 125.79% 11,400,000 3,500,000 16,000,000 KAHAWA -1.41% 11.55% 107.17% 38,100,000 29,800,000 47,900,000 SUKARI KIAMBU 3.00% 6.37% 132.99% 43,900,000 23,000,000 60,000,000 TOWN KIKUYU 1.61% 8.08% 130.85% 26,900,000 12,100,000 39,400,000 TOWN LIMURU 5.34% 0.84% 96.93% 20,500,000 10,000,000 30,000,000
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NDENDERU 2.70% 13.45% 77.59% 35,800,000 23,400,000 47,800,000 RUAKA 3.84% 6.76% 89.20% 83,100,000 68,000,000 104,000,000 RUIRU 3.38% 6.57% 100.48% 23,200,000 12,500,000 32,000,000 THIKA -1.49% -4.07% 70.48% 18,000,000 7,200,000 26,400,000 TOWN TIGONI 3.88% 11.32% 83.75% 21,600,000 17,000,000 25,000,000
Figure 23 Nairobi County against Kiambu County Comparison
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CHAPTER SIX
KILIFI COUNTY
A. Kilifi County Land Price Trends
Figure 24 Average Land Price - Kilifi County
B. Kilifi County Analysis
Kilifi is set on the coast of Kenya, 56 km northeast of Mombasa, and is focused on tourism and fishing thanks to its proximity to the Indian Ocean. The county has some of the best beaches and most popular resorts and hotels in Africa. However, its interior has suffered from sometimes severe underdevelopment.
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Nonetheless, Kilifi has registered steady linear growth in average land prices over the last five years, and posted growth of 6.92 per cent in 2017, only marginally slowed in the second half of the year by the election slowdown.
Indeed, of all the counties surveyed, Kilifi registered the fastest growth in the third quarter, during the election period, only slowing in the final quarter of the year due to the uncertainty caused by the second election.
This resilience was borne, in large part, of the county’s position as an international tourist destination that attracts tourists principally from Europe, including to a range of five-star beach hotels.
The slight drop in quarter four came as the election season also coincided with the peak tourism period in the country.
However, the county government now plans to upgrade its infrastructure, including at Malindi airport, and the Kilifi and Kijipwa airstrips, to cater for more visitors and residents, by serving larger aircraft. Local leaders are also now appealing to Kenya’s government to adopt an open skies policy to allow flights directly into the county from Europe, instead of planes having to land at Moi International Airport in Mombasa or Jomo Kenyatta International Airport in Nairobi before connection to the county.
Against the backdrop of these ambitions, land prices in Mtwapa, Vipingo and Kikambala remain the highest in the county.
In Mtwapa, the average price per acre was Sh16.6m at the end of 2012, and Sh23.4m by the end of 2017, remaining the most expensive land in the country, despite slow growth in 2017, of 2.58 per cent.
Mtwapa town is a cosmopolitan centre that has attracted many migrants due to its relative tranquillity. The low cost of putting up houses in the area has also aided in driving up its land
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prices. Building stones and ballast are available from nearby Kilifi town, while sand is harvested in Malindi, making Mtwapa a magnet for investors seeking optimal construction costs.
However, it was in Watamu that land prices grew the fastest in 2017, rising by 12.73 per cent. Malindi and Kilifi town also registered strong rises across the year, at 12.72 per cent and 12.31 per cent.
Such rises were driven in part by the government initiative to increase charter flights into the country, under the Charter Incentive Programme, launched in 2017 to attract more direct flights to Mombasa after a lull in international tourist arrivals. This was further boosted by hotel-owners’ direct efforts to market the towns in European markets.
The planned upgrade of the Malindi Airport is also expected to spark speculation by investors that would result in further land price rises.
Figure 25 Average Land Price – Overview of Kilifi County
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Figure 26 Kilifi County Land % Increases Over 5 Year
Table 8 Summary of Towns in Kilifi County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
KILIFI 0.45% 6.92% 66.22% 15,700,000 N/A N/A COUNTY KIKAMBALA 2.04% 9.73% 74.41% 19,100,000 10,000,000 28,000,000 KILIFI TOWN 3.72% 5.89% 78.65% 8,400,000 5,400,000 11,500,000 MALINDI 1.82% 9.49% 82.01% 10,000,000 5,000,000 13,100,000 MTWAPA -1.59% 5.82% 40.46% 23,400,000 13,300,000 32,600,000 VIPINGO 0.28% 4.51% 72.97% 19,800,000 13,700,000 25,000,000 WATAMU -0.89% 7.41% 82.06% 13,300,000 7,600,000 15,000,000
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Figure 27 Nairobi County against Kilifi County Comparison
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CHAPTER SEVEN
KWALE COUNTY
A. Kwale County Land Price Trends
Figure 28 Average Land Price - Kwale County
B. Kwale County Analysis
Located in the coastal region, Kwale is known for its enormous natural resources, ranging across minerals, tourist attractions, forests, fertile soils, 200-miles of coastal strip, vast trust land, and fishing waters. The county has recently sparked the interest of investors due to its historically low land prices.
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As a result, land prices in Kwale County have risen by an average 8.74 per cent a year over the five years since 2012. This steady climb is, nonetheless, the second lowest average growth rate of the 10 counties surveyed.
However, the county’s land prices posted a much better performance in 2017 than the previous year, rising by 6.63 per cent, compared with growth of 3.92 per cent in 2016.
This stronger climb gathered pace through the year, with prices falling in the first quarter, and then climbing to post the strongest rises in quarter four.
As a result, average land prices per acre closed 2017 at Sh10m, up from Sh6.6m an acre at the end of 2012.
Within the county, land prices are highest in Diani, with an acre costing an average Sh10.4m at the end of 2012, and Sh15.4m by the end of 2017, in an area renowned for its attractive beach fronts that have received worldwide recognition and several accolades.
However, the highest price rises in 2017 were in Ukunda, where land prices rose by 11 per cent across the year, with price falls in the second quarter more than offset by the climb in the last three months of the year.
Diani was not that far behind, posting 2017 growth of 8.12 per cent.
Ukunda has gained traction from investors since the upgrade of the Ukunda airstrip which now serves the expatriate communities working at the Kwale International Sugar Company Limited (Kiscol) and Base Titanium (BT), as well as a rising stream of domestic tourists.
In 2017, the county government, further, unveiled a $90bn megaproject in Shimoni village, to transform the former coastal slave trade gateway into Kenya’s next, and largest, manufacturing and export hub.
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The project, known as the Shimoni Integrated Development Project (SIDEP), is expected to transform Shimoni and many parts of Kwale into a world class eco-friendly development area as it is completed over the next two decades.
The project is set to be financed by private sector investors in partnership with national and county government agencies securing the local development agenda and is likely to fuel some further significant price growth in the county.
Figure 29 Average Land Price – Overview of Kwale County
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Figure 30 Kwale County Land % Increases Over 5 Year
Table 9 Summary of Towns in Kwale County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
KWALE 2.71% 6.63% 52.07% 10,000,000 N/A N/A COUNTY DIANI 2.52% 6.30% 47.74% 15,400,000 8,000,000 20,000,000 UKUNDU 3.34% 7.76% 68.49% 4,600,000 2,900,000 5,400,000
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Figure 31 Nairobi County against Kwale County Comparison
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CHAPTER EIGHT
NAIROBI COUNTY
A. Nairobi County Land Price Trends
Figure 32 Average Land Price - Nairobi County
B. Nairobi County Analysis
Nairobi County is home to Kenya’s capital city. It has the highest number of occupants of any county in the country thanks to its position as the national and regional commercial and financial hub.
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Pressure for space has driven prices upward relentlessly in the last five years, but over that period the rate of growth has decelerated. On average, prices in the county rose by 10.98 per cent a year from 2012 to 2017. However, the fastest growth was from 2013 until mid-2015, during which time the county’s land prices grew by an average 4.23 per cent a quarter.
Since the middle of 2015, land prices in Nairobi have risen more slowly, at an average quarterly growth rate of 1.35 per cent, with prices rising by a far more subdued annual rate of 4.23 per cent in 2017.
As a result, by the end of 2017, the average land price in Nairobi was Sh189m an acre, with further increases meeting price resistance as investors continue to seek alternative locations with easy access to the city and more favourable prices.
However, land prices in the county are likely to continue upwards driven by pockets of new development, primarily in areas that gain greater access on the completion of new infrastructure and road expansions. The other ongoing factor in maintaining subdued overall land price growth is the continuing influx of international companies, while the prospect of a removal of the country’s credit rate cap could also fuel price rises as credit becomes more accessible.
Within the county, land prices in Upper Hill, Kilimani and Ngara posted the highest prices as areas where land prices were driven primarily by commercial and high density residential developments.
Upperhill, recorded the highest five-year progression in prices in the county as well as in the whole country, with an acre that cost an average of Sh331.9m at the end of 2012, selling for around Sh537m by the end of 2016.
However, price rises in Upperhill have now slowed, with the asking price for an acre of land in the district climbing just 2.58 per cent in 2017, which represents a fall in real terms, to an average Sh551m by the end of 2017.
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The unprecedented growth in commercial buildings in the district is now slowing, as the most recent and largest generation of new premises seek to fill space, with occupancy levels having fallen on the surge in availability.
In 2017, attention shifted instead to Embakasi, where land price rises were the strongest in Nairobi County, rising by 14.86 per cent, despite some decline in the final quarter of the year. The rises in Embakasi typified the emerging pattern of land price pockets surging on new infrastructure, with the area set to enjoy far greater accessibility on the expected expansion and completion of Nairobi’s Outer Ring Road.
Likewise, South C and Lower Kabete registered rapid growth in land prices over the last year, at 13.43 per cent and 12.7 per cent, driven by the completion of the city’s Southern Bypass, which has provided an alternative route for motorists going to Western Kenya and for Northern Corridor transit traffic.
Figure 33 Average Land Price – Overview of Nairobi County
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Figure 34 Nairobi County Land % Increases Over 5 Year
Figure 35 Nairobi County v Nairobi-18 Suburbs
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Table 10 Summary of Towns in Nairobi County
QUARTERL ANNUAL 5 YEARS AVERAGE 25 75 Y % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANG PRICES NAIROBI COUNTY 0.78% 4.23% 68.34%E 189,000,000 N/A N/A DONHOLM 6.23% 12.20% 127.93% 69,200,000 42,400,000 90,700,000 EASTLEIGH -0.73% 7.67% 6.56% 282,400,000 172,700,000 375,000,000 EMBAKASI -0.64% 14.86% 104.44% 32,200,000 15,700,000 45,000,000 GARDEN 1.32% 6.28% 87.00% 62,200,000 58,000,000 70,000,000 GIGIRI -1.87% 0.39% 111.05% 225,600,000 121,000,000 266,700,000 KAHAWA WENDANI 2.14% 7.77% 69.58% 49,700,000 30,200,000 64,000,000 KAREN 0.21% 5.34% 66.78% 58,600,000 52,300,000 65,000,000 KASARANI 2.01% 7.74% 119.29% 59,900,000 35,200,000 76,900,000 KAWANGWARE -2.99% 5.28% 63.17% 69,200,000 53,600,000 80,000,000 KILELESHWA 0.34% -0.05% 86.63% 88,500,000 240,000,000 320,400,000 KILIMANI 1.16% 3.58% 93.60% 442,900,000 404,800,000 500,000,000 KITISURU 3.92% 2.96% 57.36% 79,900,000 66,200,000 90,000,000 LANGATA -0.97% 5.90% 75.88% 58,900,000 45,000,000 70,000,000 LAVINGTON -0.36% -0.02% 74.86% 234,200,000 200,000,000 270,000,000 LORESHO 2.37% 2.98% 137.25% 81,900,000 65,000,000 100,000,000 LOWER KABETE 1.54% 12.70% 93.03% 75,000,000 39,200,000 120,600,000 MUTHAIGA 5.37% 11.03% 71.50% 146,800,000 100,000,000 195,700,000 NGARA 0.70% 9.87% 78.03% 442,700,000 335,400,000 560,000,000 NYARI -1.46% -0.70% 57.04% 101,200,000 89,000,000 110,000,000 PANGANI 1.32% 3.77% 58.38% 343,200,000 260,000,000 391,900,000 PARKLANDS 0.94% 1.45% 31.68% 414,000,000 360,000,000 480,000,000 RIDGEWAYS 1.02% -0.83% 84.64% 69,200,000 60,000,000 74,000,000 RIVERSIDE 1.63% 2.25% 85.46% 422,000,000 347,500,000 483,300,000 RUNDA 1.37% 6.77% 100.79% 84,100,000 70,000,000 96,200,000 SOUTH C 1.35% 13.43% 128.19% 203,900,000 150,000,000 260,000,000 SPRING VALLEY 2.36% 7.15% 29.88% 162,100,000 117,000,000 200,000,000 THINDIGUA -1.97% 5.43% 126.37% 76,600,000 53,800,000 102,000,000 THOME -1.84% -1.67% 93.77% 69,100,000 50,000,000 82,000,000 UPPERHILL 1.40% 2.58% 66.02% 551,000,000 480,000,000 650,000,000 WESTLANDS -0.59% 2.52% 61.96% 415,000,000 350,000,000 506,700,000
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CHAPTER NINE
UASIN GISHU COUNTY
A. Uasin Gishu County Land Price Trends
Figure 36 Average Land Price – Uasin Gishu County
B. Uasin Gishu County Analysis
Uasin Gishu is situated in the mid-west of Kenya’s Rift Valley, some 330km northwest of Nairobi. The county is a cosmopolitan centre in a region dominated by large-scale wheat and maize farming, dairy farming, horticulture and sports tourism – based on the results achieved by its
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world-famous athletes. The county is also a manufacturing hub, with numerous industries and factories providing employment to thousands of its urban population.
In 2017, Uasin Gishu County posted growth of 3.84 per cent in average land prices, which represented a sharp deceleration from 2016, when prices grew by 17.99 per cent.
The county’s only substantial land price growth was in the first quarter of the year, with prices remaining almost flat from April onwards, as election uncertainty took hold, and continued.
As a result, the average land price in the county closed 2017 at Sh5.2m per acre, up from Sh3.1m an acre at the end of 2012.
The degree of slowdown was substantially borne of the area’s reputation as a hot zone for violence, such that investors feared a repeat of the 2007/2008 post-election violence in August, and thus moved to a wait-and-see position on land buying. The first-round elections were relatively peaceful in the region, which spurred some level of optimism by investors and a slight improvement in land prices in the last quarter, despite the scheduling of the second elections during the quarter.
Developers in the region also decried the tightened credit from banks due to the interest cap and the slowing economy, which denied them much needed finance, resulting in several incomplete and delayed developments.
However, the county government’s large investments in infrastructure development are likely to stimulate renewed land price growth in Uasin Gishu during 2018.
The county’s mega-projects include the construction of the Sh5.2bn Eldoret-Webuye road, following from the Sh1.3bn Kabenes-Kachibora road, and investments in a range of healthcare facilities, including the Sh1.1bn of upgrading of main hospitals, such as the Moi Teaching and Referral Hospital, Ziwa Level V and Burnt Forest Level IV, and the extension of electricity
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connections to all of the county’s 437 primary schools, as well as 212,673 additional homes, in a multi-pronged effort to boost economic growth.
In addition, the recent launch of the Uasin Gishu special economic zone that will see construction of mixed developments spanning industrial park, recreational centres with a stadium and golf course, residential homes, retail facilities, schools and technology park, among others is set to stimulate investor interest, with 18 international companies having already signed up to set up in the zone so far.
Figure 37 Average Land Price – Overview of Uasin Gishu County
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Figure 38 Uasin Gishu County Land % Increases Over 5 Year
Table 11 Summary of Towns in Uasin Gishu County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
UASIN 0.26% 3.84% 67.07% 5,200,000 N/A N/A GISHU COUNTY ELDORET 0.26% 3.84% 67.07% 5,200,000 2,100,000 10,000,000
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Figure 39 Nairobi County against Uasin Gishu County Comparison
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CHAPTER TEN
KAJIADO COUNTY
A. Kajiado County Land Price Trends
Figure 40 Average Land Price – Kajiado County
B. Kajiado County Analysis
Kajiado County lies at the southern edge of the former Rift Valley Province, about 80km from the Kenyan capital of Nairobi, and depends largely on livestock rearing and dairy farming, primarily for local markets, but with the surplus being sold in Nairobi.
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In 2017, the county recorded land price growth of 3.01 per cent, in a sharp deceleration from 2016, when prices rose by 11.50 per cent.
In 2017, the second and third quarters registered the worst growth of the year, with prices falling as election uncertainty took hold, before picking up for the strongest performance of the year in the last quarter. The late price surge saw the average price per acre close 2017 at Sh9.7m, up from Sh6.1m per acre in 2012.
Kajiado, which, like Kiambu, is located on Nairobi’s outskirt counties, sits some 18.6 km from the capital, but it currently offers far cheaper land prices than Kiambu.
Kiambu price growth once again outstripped Kajiado, at 7.28 per cent in 2017, as it continued to experience far more rapid development and land price appreciation, thanks to its position in relation to some of Kenya’s current major infrastructure projects.
Kajiado, however, has not lost its sparkle to investors, with most of them deploying the low-cost land to build affordable houses for rent.
Thus, Kajiado County, set in a mainly a pastoralism region, is slowly seeing real estate development, educational institutions, tree plantations and irrigated farms taking over the land where wildlife and countless herds of cattle previously roamed in most of the county.
Within the county, land prices in Ngong town, Ongata Rongai and Kiserian towns are the highest, largely driven by agricultural production and residential developments.
Prices in Ngong town closed 2017 at an average Sh18.9m an acre, up from sh10.3m at the close of 2012, recording the highest growth in the county in 2017, at 12.9 per cent.
In this, Ngong Town has attracted the middle classes in retreat from Nairobi ’s noise, pollution, congestion and hiked land prices, and keen to invest in the lower cost and greener pastures of Kajiado. Most of the town’s residents are Nairobi commuters, drawn by the town’s mix of
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commercial and residential developments and easy availability of building materials from quarries in Ngong Oloolua, Ongata Rongai, Gataka and Kiserian along the Kiserian to Isinya road, which provide both hard and soft stones for construction. Ngong town also has plenty of water from underground reservoirs.
Prices also rose relatively strongly in Isinya, by 5.87 and in Kiserian, by 5.05 per cent.
The reconstruction and upgrading of major roads in Kajiado have eased transport and traffic flow into Isinya and Kiserian, connecting the area to the Southern bypass and to Konza, and attracting investors from the city, many of whom have invested in farms in the area.
The towns are also characterized by affordable housing and are thus attracting city dwellers who can’t afford the higher rents in the city.
The proximity of the neighbouring upmarket Karen suburb has also contributed to the growth of the county’s land prices, the agricultural products consumed in the suburbs supplied freshly from farms in the neighbouring towns in Kajiado.
Amboseli National Park, located in the heart of the county, is also a stopover for many tourists who come to see wildlife, and continues to attract real estate investors and the hospitality industry.
This equation of low prices, relative underdevelopment, and recent new infrastructure is set to position Kajiado for above-average land price growth from 2018.
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Figure 41 Average Land Price – Overview of Kajiado County
Figure 42 Kajiado County Land % Increases Over 5 Year
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Table 12 Summary of Towns in Kajiado County
QUARTERLY ANNUAL 5 YEARS AVERAGE 25 75 % % % LAND PERCENTILES PERCENTILES CHANGE CHANGE CHANGE PRICES
KAJIADO 3.40% 3.01% 58.56% 9,700,000 N/A N/A COUNTY ISINYA 2.45% 5.87% 46.26% 4,200,000 2,000,000 6,000,000 KAJIADO 4.42% -022% 39.97% 3,300,000 1,000,000 4,800,000 TOWN KISAJU 0.46% 1.33% 46.56% 5,300,000 3,500,000 6,900,000 KISERIAN 0.33% 5.05% 75.38% 7,300,000 3,000,000 10,000,000 NGONG 3.33% 3.27% 83.40% 19,000,000 12,000,000 24,000,000 TOWN ONGATA 5.62% 2.48% 43.14% 18,900,000 9,600,000 24,300,000 RONGAI
Figure 43 Nairobi County against Kajiado County Comparison
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CHAPTER ELEVEN
KENYAN TOWNS: THE HOTSPOTS
A. The Five Strongest Climbers in 2017
Table 13 Climbers in 2017
TOWN ANNUAL GROWTH RANKING AVERAGE LAND PRICES 2017 AS AT Q4 2018
Ngata 20.66% 1 6,415,171 Utange 17.21% 2 21,080,528 Kitengela 16.59% 3 11,336,528 Embakasi 14.86% 4 32,234,952 Bamburi 14.50% 5 26,075,708
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B. Ngata
Figure 44 Average Land Price – Ngata, Nakuru County
Land prices in Ngata town rose by 20.66 per cent in 2017, making it the best performing town of all the 75 towns surveyed. Land prices in the town have risen sharply since mid-2016, delivering growth that year of 11.75 per cent, and then accelerating into 2017, before dipping in the third quarter, during the election period, and then taking off again.
As a result, the average price per acre in the town closed 2017 at Sh6.4m, up from Sh5.6m in the previous year, and Sh3.4m in 2012.
The shift in investor focus to Ngata has been driven, in part, by flight from Nakuru town due to its relatively higher prices. Nakuru town has the highest land price in the county, with an asking price of Sh12.4m per acre, which is roughly double Ngata’s land price.
Yet Ngata is situated just 10 km from Nakuru, and 25 minutes by public transport. This proximity has been key in attracting investors into residential homes and drawing town commuters. The
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transport costs are also affordable, with the fare from Ngata to Nakuru town priced at and off- peak Sh30 and Sh40 during peak hours.
The construction of the Itare Dam has also been a factor in drawing land buyers to Ngata. The dam, built to resolve the persistent water shortages in Nakuru County, has been funded by the county government at a cost of Sh34bn and will produce 100,000 cubic metres of water a day, serving over 800,000 residents in Kuresoi, Njoro, Ngata, Rongai and Nakuru town with clean and reliable piped water.
The town, unlike other towns in Nakuru County, is also ethnically mixed across a variety of tribes rather than dominated by one majority tribe, which has made it exceptional area in its perceived political neutrality.
Ngata is also set to benefit from the Sh500m expansion of the Nakuru-Eldoret highway into a dual carriageway and is strategically located close to the county’s tourist destinations, including the Menengai crater, Lord Egerton Castle, and Lake Nakuru, and on the corridor route to Lakes Bogoria and Baringo.
There is also easy access to learning and banking institutions across the Kabarak University Nakuru Campus, Egerton University Nakuru Town Campus, and town campuses for the Kenya Methodist University and Kenyatta University, as well as local Equity Bank and Kenya Commercial Bank branches - all of which are attractive to investors looking for areas close to social and commercial amenities.
The town’s land prices are, therefore, expected to maintain their upward trend during 2018, as it continues to benefit from the infrastructure additions in a mix that is delivering a good quality of life at relatively low prices by national standards.
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C. Utange Town
Figure 45 Average Land Price – Utange, Mombasa County
Land prices in Utange rose by 17.21 per cent in 2017, in growth that was lower only than that of Ngata in Nakuru.
Land prices maintained their high growth of 2016, only slowing down marginally in the last quarter on 2017 on the election uncertainty to close at an average price of Sh21.1m per acre at year-end, up from Sh18m an acre in 2016, and Sh11.4m per acre in 2012.
Utange’s rise has been driven principally by investor flight from Nyali, which is the most affluent town in Mombasa, with land prices that dwarf Utange’s almost five-fold.
Many of Nyali’s residents are high net worth individuals. It also draws international tourists who come to the country and decide to settle in the town because of its modern standards, high-class hotels, residential houses, and long white sand beaches.
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But, recently, some of Nyali’s real estate developers changed tack, departing from the town’s building norms to build residential skyscrapers. This has not gone well with many of the residents in the area, who have felt this has infringed their privacy and changed the nature of the town, prompting a flow of residents seeking alternative towns to settle in.
Utange has provided a strategic alternative location for these investors, for while it is relatively undeveloped compared to its peers, its proximity to Nyali, just 14 km away, has allowed for easy and timely access. As a result, land prices in the area have started to rise and accelerate, for land that is being bought mainly for residential development by middle to upper class income earners.
The influx has also stimulated the town’s economy, bringing new petrol stations, churches, schools and shops. The place is also well organized and secure, with land available in abundance.
The government has also recently announced plans to construct a highway that will pass close to the town and connect Malindi, Mombasa and Lunga Lunga before crossing the Kenyan border to pass through Tanzania’s Tanga, Pangani and Saadani to Bagamoyo.
The road will be a major milestone in terms of trade within the two countries and is also expected to further stimulate domestic tourism.
Land prices in the area are therefore expected to continue their upward ascend.
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D. Kitengela
Figure 46 Average Land Price – Kitengela, Machakos County
Land prices in Kitengela rose by 16.59 per cent in 2017, amounting to the third fastest growth across the 75 towns surveyed. Moreover, the strong growth was steady throughout the year, despite the election uncertainty, suggesting considerable underlying momentum.
As a result, the average price per acre rose to Sh11.34m by year end, from Sh5.1m at the end of 2012.
Kitengela has several positive factors that have positioned it for faster growth than its peers.
Of these, infrastructure development tops the list, with the anticipated Konza Techno City situated close by. This, together with the construction of the Nairobi-Namanga highway that passes near Kitengela, has contributed significantly to the surging land prices in the town.
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Kitengela also borders Syokimau, one of the towns on the newly constructed Standard Gauge Railway, meaning the area is accessible by both rail and road, yet its land prices remain relatively affordable compared to other satellite towns around Nairobi.
This has brought rapid population growth and seen the town rise as an economic and real estate hub. New institutions that have set up in the area include the Kitengela International School, Acacia International Schools, Aga-Khan Hospital, Gertrude’s Children’s Hospital, Equity Bank and KCB. The town has also attracted some of the country’s big supermarket chains, and benefits from the presence of factories that have employed thousands. Moreover, the cost of materials for construction is low.
The towns continued growth throughout the year can further be attributed to the calmness of the town during and after the election period. This has further boosted the confidence of many Investors in Kitengela because of the relative security of the town in contrast to the tension that exists in many of the other satellite towns.
Kitengela has also attracted the interest of Zamara, a retirement schemes administrator, which is building 211 housing units on a 30-acre plot in the town, in a development designed to boost income for the fund, which currently manages Sh23bn belonging to 33,000 workers.
The town’s land prices are, therefore, expected to continue rising as it reaps gains from the forthcoming infrastructure developments and as prices adjust to levels more like those in other towns set at a similar distance from the country’s capital city.
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E. Embakasi Town
Figure 47 Average Land Price – Nairobi, Nairobi County
Land prices in Embakasi town rose by 14.86 per cent in 2017 to make it the fourth best performing town of all the 75 surveyed.
In this, the town reported linear growth in land prices across the year, only dipping slightly towards year end on election jitters. Due to its strategic location, the town has attracted both commercial and residential investors, because of which land prices have climbed to reach Sh32.4m by the end of 2017.
Embakasi is easily accessible by air, road and rail, with multiple road connections and easy access to the Mombasa Road, and is just seven minutes away from Jomo Kenyatta International Airport. For Nairobi commuters, road routes are augmented by the Rift Valley railway, which passes through the town, as well as the Standard Gauge Railway station in neighbouring Syokimau.
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Embakasi is also set just 31km away from the Southern Bypass, giving residents easy access to western Kenya without needing to pass through central Nairobi.
This positioning has brought an influx of affordable rental residential apartments, which have attracted middle income commuters.
However, the main driver of the town’s rising land prices has been the expansion of Nairobi’s Outer Ring Road into a six-lane highway with interchanges and over-passes, which has attracted middle income earners to the Eastlands side of Nairobi, Embakasi town included. The opening of the road in June 2017 saw the average price of an acre in the town rise from Sh29.2m in the first quarter of 2017 to Sh31.4m by the second quarter.
Surrounding towns, such as Donholm, have also benefited from the rise of Embakasi, hosting spill over residents, with Donholm’s land prices doubling from Sh30.4m five years ago to Sh69.2m by the end of last year.
Outer Ring Road residents can also now access areas on the eastern side of Nairobi, including the Thika Road, Kiambu, Ruiru and Thika, without having to pass through the Central Business District.
This infrastructural transformation has attracted a flow of businesses to Eastlands, which includes Embakasi, Donholm and Komarock. There has been a rise in commercial developments, across malls, supermarkets, industrial warehouses and production parks, as investors move to take advantage of the availability and proximity of the town’s diverse transport options, labour, and import and export facilities.
Moving forward, land prices in Embakasi are likely to increase further driven by high demand.
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F. Bamburi
Figure 48 Average Land Price – Bamburi, Mombasa County
Land prices in Bamburi town rose by 14.50 per cent in 2017, in one of the top five best performances of the 75 towns surveyed.
Prices rose throughout the first three quarters, with the strongest performance in the second quarter, before falling in the last quarter to close the year at an average price per acre of Sh26.1m, up from Sh14.2m in 2012. The dip in the last quarter was mainly due to the prolonged election process, which put both investors and tourists on alert, in waiting to see the outcome and impact of the elections.
Tourism is one of the main economic drivers in Bamburi, which hosts some of Kenya’s leading five-star hotels, including Sarova WhiteSands Hotel, Travellers Beach Hotel and Club, and Azul Margarita Beach Resort, due to its beach front landscape.
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In addition, it plays host to several international schools, including Braeburn Mombasa International School, Kencada International Academy, and Jaffery Academy.
The town is also known for its quiet and serene nature and availability of land for expansion. All these factors, coupled with the road expansion plans by the national government in the area have been attracting both residential and commercial investors, thus driving land prices upwards.
The town was seemingly only affected by the election uncertainty and with that behind it, the upward trend in its land prices is expected to continue.
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CHAPTER TWELVE
KENYAN TOWNS: THE WORST PERFORMING
A. The Five Bottom performing towns in 2017
Table 14 Worst in 2017
TOWN ANNUAL GROWTH RANKING AVERAGE LAND PRICES 2017 AS AT Q4 2018
THIKA TOWN -4.07% 1 18,023,452 GILGIL -1.87% 2 2,242,283 THOME -1.67% 3 69,135,529 NAIVASHA TOWN -1.12% 4 4,920,048 RIDGEWAYS -0.83% 5 69,239,697
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B. Thika Town
Figure 49 Average Land Price – Thika Town, Kiambu County
Land prices in Thika fell by 4.1 per cent in 2017, in the worst performance of all the 75 towns surveyed.
The fall came after a year of spectacular land price rises in the town in 2016, which saw the average price per acre rise by 30.11 per cent.
However, with investors having raced into the market in 2016, driven by the town’s recent gains in accessibility from Nairobi on the completion of the Thika Superhighway, the announcement of new land development regulations by Kiambu County government poured ice onto the market, at a time when it was holding its largest ever development pipeline.
The policy was, itself, triggered by the pace of the development, which has seen large tracts of agricultural land converted into real estate at tremendous speed.
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The prospect of constraints on land usage, therefore, brought the market to a full stop, seeing the average price per acre fall to Sh18m in 2017, compared with Sh18.8 at the end of 2016 and Sh10.6m per acre in 2012.
Beyond this, however, sources state that Thika town is suffering a slow, but progressive, exodus of investors, who are moving to other towns with greater growth potential. Despite the town offering a cosmopolitan mix of economic activities, concerns have arisen that the town’s growth in terms of development seems to have reached its limits. Land is also said to be scarce in the area.
The town did benefit from the construction of the Thika Superhighway, with the greater ease of access seeing commuters consider the town as a more favourable location and investors moving in to meet that potential demand with new real estate.
However, there is not much else going on in the area in terms of infrastructure, which has since seen investors and developers seek other areas with greater growth potential, such as Ruiru, which is set to benefit from the value brought by Kenya’s largest megaproject, Tatu City.
Thus, while Thika and Ruiru land prices were roughly the same in 2012, Ruiru has outpaced Thika with average annual growth of 14.92 per cent over the past five years, compared with Thika’s 11.31 per cent.
The same is true with Juja, previously a quiet farming area, but now another destination for investors from Thika due to its closer proximity to Nairobi city, low supply of residential units, and lower land prices. From its humble beginnings, the town has posted average annual growth in land prices of 17.69 per cent over the past five years, which is the fastest in the region, and has been accompanied by a wave of development across shopping malls and residential real estate.
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C. Gilgil
Figure 50 Average Land Price – Gilgil, Nakuru County
Land prices in Gilgil town fell by 1.87 per cent in 2017, delivering the second worst performance of the 75 towns surveyed.
Land prices started dipping early in the year as election jitters settled in and fell much further in the second quarter, before picking up marginally in the second half of the year to close the year at an average price per acre of Sh2.2m, down from Sh2.3m in 2016, and only marginally ahead of the average price of Sh1.9m in 2012.
However, it is likely that the local market will resume its sedate climb from 2018, or as soon as the interest rate cap is eased.
Gilgil is known for its residential areas, holiday homes and resorts, with investors drawn by the quality of the location, including the town’s stunning views over Lake Elementaita, and the climate, which is warmer than areas such as Mai Mahiu and Njoro.
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Some of the private developments that have been set up in the town include Sunflower and Lake Elementaita Nature Lodge, which are run as gated communities, and as holiday homes offering short-term and long-term rentals.
A drawback of the town has been the persistent traffic jams heading to and from the weighbridge, with motorists, at times, spending hours along the same stretch of road. However, the government has now moved to resolve the roadblock, with KENHA announcing plans to ease congestion on the road by constructing a truck lane along the Naivasha-Gilgil section.
The town is also benefiting from customer spill over due to its proximity to Naivasha.
With Naivasha enjoying international limelight in the hospitality industry, investors are looking at the next option, which happens to be Gilgil, where they are cashing in on the affordable prices to acquire parcels of land in prime places. Land prices in Gilgil are cheap compared to Naivasha.
The predominance of individual residential investments has seen the development of the town put on stay, to some degree, by the interest rate cap. But the town’s subdued performance in 2017 is unlikely to herald further declines, and once the local congestion problem is resolved, and access to finance becomes less restricted, its growth could even accelerate.
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D. Thome
Figure 51 Average Land Price – Thome, Nairobi County
Land prices in Thome fell by 1.67 per cent in 2017, delivering the third worst performance of all the towns surveyed in Kenya.
Over time, the town had recorded steady land price rises, and in 2016, prices jumped sharply, rising by 31.45 per cent. But after further growth in the first quarter of 2017, prices then plateaued, before turning downwards in the final months of the year.
As a result, the average asking price per acre closed the year at Sh69.1m, compared with Sh70.3 in 2016 and Sh35.7m in 2012.
Thome is mainly a residential area with most residents buying plots to build their dream home for settling into. Although the area has a mix of investors, most of the residents are middle to
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upper class individuals in white collar jobs in Nairobi and parts of Kiambu who purchase land and fund construction with bank loans.
For this type of investor, the interest rate cap has bitten particularly severely, seeing purchasing thwarted, with no alternative form of funding.
In the long term, Thome is likely to appeal to a new round of home builders, based on its position between the Thika Superhighway and the Northern Bypass, which provides easy access for residents and commuters. The area is also adequately tarmacked adding to its credential as an elite suburb.
The area is now home to residential buildings and mixed-use developments that house tenants seeking service convenience in selecting a place of residence close to shopping mall Garden City, which provides services such as banking, restaurants and leisure activities.
The town also benefits from well-drained soil which has attracted developers, in that the rainy seasons do not render its paths impassable.
Against this backdrop, the planned review of the rate cap is likely to be the determining factor in reigniting the town’s land price rises.
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E. Naivasha Town
Figure 52 Average Land Price – Naivasha Town, Nakuru County
Land prices in Naivasha fell by 1.12 per cent in 2017, delivering the fourth worst performance of all the 75 towns surveyed, in another town more sensitive than the norm to the interest rate cap.
Price growth in the town was flat in 2013, at a time of high interest rates, but then began to accelerate in 2014, and rose sharply in 2016, recording annual growth of 32.83 per cent.
However, in 2017, with finance tight for plot buyers and developers, and the town carrying a history as a hot zone in the 2007/2008 post-election violence, prices were doubly hit.
The effect on Naivasha of the election violence a decade earlier was severe, with hundreds of landlords and tenants evicted, and property prices falling sharply, which saw investors hold off during last year’s election uncertainty.
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This was most evident in the third quarter, when land prices dropped sharply, before picking up slightly in the last quarter to close at an average price per acre of Sh4.9m, up from Sh2.3m in 2012.
Investors in the region also cited the current credit crunch, following the rate capping law, as a reason for the slowdown. The developer market in the region suffered, with most developers relying on credit and the capping denying them funding. But the predominance of home building for high and middle-income earners, including as new gated community estates such as the Aberdare Hills Resort, Longonot Gate and La Casa, also made the town’s land market more vulnerable to the scarcity of finance.
However, with the second phase of the Nairobi- Naivasha Standard Gauge Railway (SGR) line now under construction, the town’s potential is set to grow seeing land and housing prices move upwards once more. The 120-kilometer line will connect the town with the recently completed stretch of the railway from Mombasa port to Nairobi, and eventually to Kampala, Kisumu and Malaba, allowing for the direct movement of cargo from Naivasha.
The town is also a tourist destination and home to breath-taking sites such as Hell’s Gate National Park, Lake Naivasha, Crescent Island, Crater Lake, the mount of the 2,776m Longonot, the 3,500- acre Kigio Wildlife Conservancy, and Ol Karia, all of which continue to attract visitors and investors to the area.
Any review of the interest rate cap that leads to resumed financial flows would, therefore, be likely to refuel investment into the region and see land prices resume their upward trajectory.
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F. Ridgeways
Figure 53 Average Land Price – Ridgeways, Nairobi County
Land prices in the Ridgeways suburb fell by 0.83 per cent, after several years of subdued performance, following steep climbs through 2013 and 2014.
The area’s lack-lustre land market thus delivered an average price per acre of Sh69.2m per acre by year end, down from Sh69.8m in 2016, and compared with Sh37.5m in 2012.
As an upper middle-income estate, Ridgeways is located along Kiambu Road, on the outskirts of Nairobi, sitting approximately 10.8km from the CBD. The primarily a low-density residential area, which borders Thindigua, Muthaiga, Runda, and Garden Estate is popular for its serene environment and beautiful views, which see it surrounded by the Karura Forest.
However, its prices have stagnated in the last two years, driven by rising traffic congestion during rush hours, caused primarily by vehicles entering and exiting the Ridgeways Mall. Motorists using
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Kiambu Road have had to contend with hour-long traffic jams as a result, leading to complaints that even saw a parliamentary committee tasked with resolving the root cause of the traffic snarl- up.
The road woes, and the shift in character of the area following intense and rapid development, have seen the area suffer waning developer interest and flight to alternative areas, often in upmarket estates along the Northern Bypass.
The area is also governed by zoning regulations that dictate the design of local structures. The controlled development policy enforced by existing land owners has deterred many land buyers, who prefer full control of their projects once they buy land parcels.
This has made the area less attractive for many buyers than neighbouring Thindigua, where zoning regulations have been relaxed.
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