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Land price rises by 20pc on the Nairobi Expressway lift

Land
prices along the Mombasa Road commuter belt and its satellite towns have
increased at the fastest rate in the previous six years as a result of the
opening of the Nairobi Expressway, creating opportunity for investors in
Syokimau, Kitengela, and Athi River.

According
to HassConsult’s third quarter report, house prices in Nairobi and the
surrounding area increased by 10.3 percent in the year to September, reversing
a distressing trend that had been present for the previous six years.

Due
to better accessibility in the towns from improved infrastructure, the value of
land increased by a high of 9.49 percent in the year to September.

Since
2016, when growth stood at 21.39 percent, this increase has been the fastest.
This reflects the property market’s appreciation over the previous six years as
a result of reduced traffic, which has benefited homebuyers looking to settle
outside of the busy capital.

However,
it is the towns along Mombasa Road that have recorded the greatest
increase in land prices since the opening of the Nairobi Expressway, which has
made them more accessible to investors and homeowners.

According
to the HassConsult report, the average asking price for an acre of land in
Syokimau increased by 20.1 percent from last year to Sh27.7 million, with some
quoting up to Sh31.6 million.

Buyers
looking to invest in Mlolongo will pay Sh33.2 million after the price of an
acre increased by 4.6 percent, with the town benefiting from the opening of the
Expressway this year and the standard gauge railway earlier this year.

During
the review period, land prices in Kitengela and Athi River increased by 11.2
percent and 5.3 percent, respectively.

“Expansion
of infrastructure and road projects in satellite towns is easing pressure for
Nairobi land property development,” said Sakina Hassanali, the head of
development consulting and research at HassConsult.

According
to Collins Chacha of Universal Homes, the Expressway has reduced commute time
from Nairobi’s Westlands, where most offices and potential homebuyers work, to
around 15 minutes.

“Before
the Expressway, going to Kitengela was very hard and one had to plan their
whole day around that event. Now one can commute there in 15 minutes and have
several meetings later while at it,” said Mr Chacha.

Daniel
Ojijo, chairman of Universal Homes and a real estate expert, believes that
rising population and demand for housing in satellite towns are also driving up
land prices.

“Another
factor is that land on the outskirts of Nairobi is less expensive than real
estate in the central business district and within Nairobi,” Mr Ojijo
added.

Land
prices in towns outside of the city increased by 9.49 percent in the year to
September, compared to 5.55 percent the previous year. Juja, one of the
satellite towns experiencing an increase in plot prices, reached a new high of
Sh18.8 million.

According
to the HassConsult report, “Juja has benefited from road infrastructure
and investors being drawn to develop housing and affiliated property for higher
education centers located in the area.”

The
average price of land in Nairobi fell to Covid levels when growth fell to -2.17
percent in 2020 due to economic headwinds caused by the pandemic.

After
years of booming prices, real estate has been hit in recent years by a lack of
credit and affordability, as well as the Covid-19 pandemic, which has greatly
eroded spending power among prospective buyers.

Land
prices in Nairobi fell by -0.13 percent during the review period, compared to a
0.82 percent increase the previous year, due to lower demand for prime real
estate.

Property
in general grew by 10.3 percent during the same period, as land prices reached
new highs.

Townhouses
and villas defied the trend, rising 16.6 percent year on year in September due
to increased demand, while apartment prices fell slightly by -0.4 percent.

The
report revealed stronger price movements in the villas and townhouses segment
in the upper suburbs, where there was a high demand for units with ample
parking.

The
drop in apartment prices indicated that sellers in the highly competitive
market were becoming increasingly willing to accept negotiated asking prices.

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