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26 July, 2021

Cytonn Real Estate, the development affiliate of Cytonn Investments, has released their Nairobi Metropolitan Area (NMA) Land Report 2021, a report that highlights NMA’s land sector market performance based on the current selling prices and the annual capital appreciation, thereby also identifying investment opportunities and providing a general outlook for the sector.

“The NMA land sector land sector registered improvement in activities in 2020/2021 despite the tough economic environment and an oversupply in select sectors of real estate such as the commercial office sector of 7.3mn SQFT attributed to; i) improving infrastructure opening up areas for investments and price boosts, ii) the 0.6% and 33.6% improved budget allocation for the infrastructure, and, Housing, Urban Development and Public Works sectors in FY’ 2021/22 to Kshs 182.5 bn and Kshs 21.8 bn, respectively, from the Kshs 181.4 bn and Kshs 16.2 bn allocated in FY’2020/21, respectively, which source for more developments and improved land demand, iii) positive demographics, iv) the increasing focus on the affordable housing agenda hence creating demand for land especially in the satellite towns of NMA, and, v) reduced supply of development land at affordable prices in areas close to the Nairobi CBD resulting in demand for the same in satellite towns,” stated Linah Amondi, a Research Analyst at Cytonn Investments.

Despite this, some of the factors that still impeded performance of the sector included; i) reduced spending power by prospective clients, ii) reduced development activities in the real estate sector in the wake of the pandemic, iii) inadequate infrastructure hindering accessibility and investment opportunities in various parts within the NMA, and, iv) inadequate access to credit supply.

However, some of the factors that are likely to shape the sector’s performance going forward include; i) Stamp Duty (Valuation for Immovable Property) Regulations aimed at improving the efficiency of land transaction processes, ii) digitization of land records aimed at curbing fraudulent land cases and ease land transaction processes, and, iii) e-construction permit system that will further enable easier and faster building plan approvals which in return will boost land development activities through various construction activities which initiate improved demand for land.

The NMA land sector on overall recorded an average annual capital appreciation of 1.8% in 2020/2021, 0.3% points increase when compared to the 1.5% realized in 2019/2020, with asking prices averaging at Kshs 127.8 mn thereby realizing a 9-year CAGR of 12.2%. The improvement in performance was mainly attributed to the increased demand for land in low rise areas which recorded the highest annualized capital appreciation of 4.6% compared to a market average of 1.8% attributable to their serene environments, sufficient amenities and infrastructure, and, their strategic locations in sparsely populated zones hence enhancing privacy. However, land prices in the commercial areas of the NMA registered the highest price correction of 3.6% attributed to unaffordability with their current average prices coming in at Kshs 404.4 mn compared to a market average of Kshs 127.8 mn, coupled with the limited development activities in the real estate commercial office sector and an oversupply of 7.3mn SQFT as at 2020.

The summary of the performance is as shown below;

The table below shows a 9-year performance summary of the NMA land sector based on the average asking prices, CAGR and capital appreciation;

All Values in Kshs Unless Stated Otherwise

Summary of the Land Performance Across All regions in Nairobi Metropolitan Area


*Price in 2011

*Price in 2015

*Price in 2016

*Price in 2017

*Price 2018/19

*Price 2019/20

*Price 2020/21


2019/20 Capital Appreciation

2020/21 Capital Appreciation

∆ in capital appreciation


NMA Low Rise Residential Areas

35.6 mn

67.8 mn

78.4 mn

82.4 mn

81.0 mn

84.2 mn

87.9 mn






Satellite Towns-Unserviced land

4.2 mn

9.5 mn

12.8 mn

13.8 mn

14.2 mn

14.7 mn

15.2 mn






Satellite Towns-Serviced land

5.5 mn

12.7 mn

14.0 mn

15.0 mn

14.2 mn

15.0 mn

15.7 mn






NMA High Rise Residential Areas

52.6 mn

91.4 mn

109.2 mn

117.0 mn

116.6 mn

115.6 mn

115.8 mn






Commercial Areas- NMA

145.0 mn

359.3 mn

421.8 mn

433.0 mn

421.0 mn

419.0 mn

404.6 mn







48.6 mn

108.1 mn

127.2 mn

132.2 mn

129.4 mn

129.7 mn

127.8 mn






Source: Cytonn Research

We have three positive outlooks in the land sector particularly for infrastructure development, legal reforms and land sector performance, one neutral outlook for real estate activities and one negative outlook for credit supply bringing the total outlook of the sector to POSITIVE. We therefore expect its performance to be further boosted by robust infrastructure activities ongoing, increased demand for developments going forward and positive demographics, despite factors such as reduced spending power owed to the tough economic conditions and the inadequate infrastructure in some areas of the country still impeding its performance. Below is a summary of the sector’s conclusion based on various indicators;

Key: Green – POSITIVE, Grey – NEUTRAL, Red – NEGATIVE highlights sectorial outlook

Conclusion and Outlook of the NMA Land Sector Based on Key Indicators


2020 Projections

2021 Projections

2020 Outlook

2021 Outlook

Infrastructure Development

  • Continued commitment by the government to its infrastructure developmental agenda, opening up areas for development thus boosting land value, despite the pandemic.
  • We expect the infrastructure sector to register more development activities with the robust focus by the government to initiate, implement and conclude projects despite the pandemic, coupled with the 0.6% budget allocation increase for the FY’2021/22 to Kshs 182.5 bn from Kshs 181.4 bn allocated for the sector in the FY’2020/21, thus continue opening up areas for investment opportunities and boost property prices.



Legal Reforms

  • We expected reforms such as the amendment of the Business Laws Act to allow for online assessment, payment, and franking of stamp duty; allowance for the use of electronic signatures in the execution of land documents such as title deeds, lease agreements, land rates clearance and transfer, and the general digitalization of the lands ministry will enhance the ease of doing business within the land sector.
  • We expect legal reforms such as the Stamp Duty (Valuation for Immovable Property) Regulations 2020 published by National Treasury Secretary, Ukur Yatani in October 2020 to continue improving the efficiency of land transaction processes in the country such as acquisition processes, and approval processes.



Credit Supply

  • We expected constrained credit supply to cripple real estate development activities, as financiers such as banks aimed to limit exposure amidst increasing loan deferrals and defaults, in the wake of an economic slowdown attributed to the ongoing COVID-19 pandemic.
  • We still maintain our view on credit access constraints to still impede the performance of the sector due to the higher lending interest rates coupled by the longer transaction timelines involved.



Real Estate Activities

  • We expected the real estate sector to record a slowdown in development activities attributed to the current global and local economy slowdown and the existing oversupply of space in select sectors namely commercial office, retail and high-end residential markets.

  • However, we expected the sector to improve significantly towards the end of 2020 once economic activity regains momentum.
  • We expect the sector to register improved activities attributed to factors such as improving infrastructure developments opening up areas for investments, and the affordable housing initiative purposing for improved land transactions.

  • However activities in the sector are still expected to be slowed by the reduced spending and limited credit supply.




  • We expected the performance of the land sector to be cushioned by; (i) the growing demand for development land, especially in the satellite towns as developers strive to drive the government’s Big Four government agenda on the provision of affordable housing, (ii) improving infrastructure such as the ongoing construction of the Western bypass, and, (iii) increased demand for development land by the growing middle income population.
  • With the economy slowly recovering evidenced by the improved performance of the sector, we expect factors such as improving infrastructure opening up areas for investment opportunities coupled by the various land reform measures geared towards the development of the sector to further boosts its performance.



For more details, see the Nairobi Metropolitan Area Land Report 2021