Rent prices in the country increased by 3.3 percent in the second quarter of this year as confidence is returning to the sector following the end of the political uncertainty that had gripped the country most of last year.
HaasConsult says in a 2018 fourth-quarter report released recently that rent prices in Kitisuru led the pack in Nairobi with house rents increasing by 2.7 percent over quarter while Langata posted the highest rent price increases in the apartment segment at 3.7 percent.
Semi-detached houses saw the highest quarterly increase with asking rents moving 5.6 percent and 14.3 percent respectively on an annual basis.
Tigoni was the best performing satellite town in house rent price increases, increasing by 4.8 percent in the quarter while Limuru lead the pack on an annual basis with rents increasing by 13.3 percent.
“Landlords are now confident enough to renew rent escalations which had been halted over the last year due to uncertainty. The biggest beneficiaries are landlords who own units in suburbs and satellite towns that have traditionally been semi-detached house markets,” said Hass Consult Head of Development Consulting and Research Ms. Sakina Hassanali.
Total returns, which comprise of rental yields and property price increases, rose to 11.4 percent over the quarter, nearly three times the 4.27 percent that was recorded over the same period a year ago.
On the sales market, property prices recorded gains as confidence surged despite the effects of the interest rate caps on dulling demand. Property prices rose by 3.6 percent over the quarter, levels last seen two years ago.
Gigiri was the top performer within Nairobi with house prices increasing by 2.7 per cent while Westlands led the apartment price rises up 2 per cent in the quarter, while Within the satellite towns, Ngong Town saw price rises across the board with house prices increasing by 5.8 per cent and apartment prices up 6.9 per cent over the quarter – the highest witnessed in both segments.
Kilimani had the lowest quarterly price increase in the sales market segment as prices went down by 2.3% over last year.
However Despite renewed confidence; the interest rate cap is a hurdle towards the market’s full potential.