Last year, we released our Nairobi Metropolitan Area (NMA) Residential Report 2020, themed “A Buyer’s Market Amidst a Global Crisis” where we analyzed the performance of 31 residential nodes. This week we update our research on the Nairobi Metropolitan Area (NMA) residential sector by showcasing the sector’s performance in the region in terms of price appreciation, rental yields and market uptake, based on coverage of 32 areas located within the Nairobi Metropolis. We also discuss factors affecting residential supply and demand, the recent developments impacting the sector and conclude with a look at the investment opportunities as well as the sector’s overall outlook for the next financial year. As such, we shall discuss the following:
- Overview of the Residential Sector,
- Recent Developments,
- Residential Market Performance, and,
- Conclusion, Outlook and Investment Opportunity
Section I: Overview of the Residential Sector
In FY’2020/21, the residential sector recorded increased activities supported by the reopening of the economy in August 2020 leading to a more favourable operating environment which encouraged construction activities and property transactions. As at Q3’2020 real estate and construction’s contribution to GDP stood at 16.0%, a 0.9% points increase compared to 15.1% recorded in Q2’2020 according to Kenya National Bureau of Statistics Quarterly Gross Domestic Product Report, with the improvement attributed to increased liquidity after a boost in investor confidence, when the government relaxed measures imposed to curb the spread of the pandemic. The residential sector continued to boost performance of the real estate sector with house prices and rents having recorded an uptick. We expect the sector’s contribution to improve more for the rest of the year despite the pandemic effects supported by;
- Government and private sector aggressiveness in implementing housing initiative programs,
- Anticipated increase in the number of building approvals complemented by the planned Kshs 30.0 mn Nairobi County e-Development Permit System upgrade expected to be done by June 2022, aiming to offer faster and efficient construction approvals in Nairobi, and,
- Allocation of Kshs 3.5 bn to the Kenya Mortgage Refinance Company (KMRC) in the FY’2021/22 Budget Statement, to boost mortgage uptake thus encourage buying, building and housing construction activities.
We expect the following factors to shape the performance of the residential sector;
- Housing Deficit: There still exists a housing deficit of more than 2.0 mn units with the government’s initiative of delivering approximately 50,000 units every year still yet to be realized. With the current tough economic time, affordable housing continues to attract demand as people seek to own homes at a time when the country has seen increased unemployment and the subsequent drop in disposable incomes,
- Demographics: According to the 2019 census data, Kenya currently has a population of 47.6 mn, with higher population and urbanization growth rates than the rest of the world; currently at 2.2% and 4.0% against the global averages of 1.1% and 1.9% respectively, and,
- Access to Credit: The high mortgage interest rate currently at 12.0% and high transaction costs, has made it difficult for low and middle income earners to afford mortgages. However, with the government having allocated Kshs 3.5 bn for FY’2021/22 to Kenya Mortgage Refinance Company (KMRC) to enhance its capital and provide affordable loans, we expect improvement in performance in the mortgage lending and uptake rate.
In terms of supply, the residential sector was largely constrained by insufficient access to affordable funding by developers, and bureaucracies and delays in approval processes. In 2021, new supply is also expected to slow down owing to:
- Insufficient Access to Credit: With the increase in non-performing loans, the resultant impact is that most of the lenders will pull back or cease new lending to real estate backed loans due to the risk of default in payment, therefore we expect developers to seek alternative sources of financing such as Real Estate Investment Trusts and bonds,
- Infrastructure: Inadequate and poor infrastructure in different regions of the country limit development activities due to lack of accessibility hence supply limited as well. The insufficient drainage and sewerage systems in some areas also discourage developers due to the expected high development costs of projects, and,
- High Development Costs: Development costs remain high subject to high land and financing costs. According to Cytonn Land Report 2020, average land price per acre within Nairobi Suburbs is currently at Kshs 419.0 mn, in comparison to the Satellite Town’s average of Kshs 25.0 mn, thus makes it hard for developers to undertake projects without sufficient financial resources.
However, to improve profit margins and supply, developers have embraced joint venture deals and public-private partnerships (PPP) with institutions like foreign investment institutions seeking to enter the market.
Section II: Recent Developments
In terms of regulation, the government announced a couple of policies and measures affecting the residential sector namely:
- Finance Bill, 2021: H.E President Uhuru Kenyatta signed the Bill into law, and some of its provisions include; i) re-introduction of a 20.0% excise duty on fees and other commissions earned on loans by financial institutions, ii) definition of infrastructure bond to include road, hospital, port, sporting facility, water and sewerage system or a communication network with interest income received from infrastructure bonds for a maturity of at least 3 years exempt from income tax, and, iii) a Permanent Establishment (PE) to include a building site, construction, assembly or installation project or any supervisory activity connected to the site or project but only if it continues for a period of more than 183 days,
- The Landlord and Tenant Bill of 2021: The Bill was tabled in Parliament with the aim of consolidating the laws relating to the renting of business and residential premises and regulating the relationship between the landlord and tenant in order to promote stability in the rental sector, in March 2021,
- New Draft Valuation Roll: Nairobi’s City Hall announced plans to conduct public participation into the New Draft Valuation Roll, on 16th June 2021 in the 17 sub-counties in Nairobi, to pave way for its roll-out, since being tabled before the Nairobi County Assembly February 2021, and,
- National Property Rating Legislation: The Kenya’s National Treasury announced plans to draft a national property rating legislation to replace the outdated Valuation for Rating Act of 1956 and the Rating Act of 1963 in January 2021. The agency sought to overhaul the 1956 property valuation laws in a bid to determine new land rates and ensure inclusion of more property owners into the tax bracket.
On the affordable housing front, we continued to see both the government and private sector launching projects with low-cost housing being the main focus, and a few notable projects launched or ongoing during FY’2020/21 include:
|
Various Launched/Ongoing Affordable Housing Projects in FY’2020/21 |
|||||
|
Project |
Organization |
No. of Units |
Project Start Date |
Project Status |
Expected Date of Completion |
|
River Estate, Ngara |
National Government and Edderman Property Limited |
2,720 |
March 2019 |
Ongoing |
December 2021 |
|
Pangani Housing Project |
National Government and Tecnofin Kenya Limited |
1,562 |
May 2020 |
Ongoing |
May 2022 |
|
Buxton Estate |
County Government of Mombasa and Buxton Developers |
1,860 |
May 2021 |
Ongoing |
May 2022 |
|
Nakuru Affordable Housing Units |
National Government and World Bank |
600 |
May 2021 |
Ongoing |
November 2022 |
|
Kakmega Affordable Housing Project |
County Government of Kakamega |
4,000 |
July 2021 |
Initial stages |
March 2022 |
|
Kongowea Village Mombasa |
International Finance Corporation and Belco Realty |
1,379 |
- |
Initial Stages |
2024 |
|
British-Funded Affordable Housing Initiative |
Acorn Holdings |
10,000 |
- |
- |
- |
Source: Online research
Section III: Residential Market Performance
In terms of performance, average total returns improved in FY’21 to 5.5%, a 0.5% points increase from 5.0% recorded in FY’20, and can be attributed to residential average y/y price appreciation, which came in at 0.6%, 0.7% points higher compared to a price correction of 0.1% recorded in FY’20. Market uptake remained subdued coming in at 15.1% on average, 3.2% points lower than 18.3% recorded last year, indicating reduced demand for residential units attributed to constrained purchasing power. However, the average price per SQM came in at Kshs 117,865, 3.4% higher than FY’20 average of Kshs 113,972, due to an uptick of house prices as sellers aimed to cash in on the improving business environment when the economy reopened.
(All Values in Kshs Unless Stated Otherwise)
|
Residential Performance Summary FY’21 |
||||||||
|
Segment |
Typology |
Average Price Per SQM |
Average Rent Per SQM |
Average Occupancy |
Average Annual Uptake |
Average Rental Yield |
Average Y/Y Price Appreciation |
Average Total Returns |
|
High-End |
Detached |
193,010 |
656 |
86.6% |
13.6% |
3.7% |
1.1% |
4.8% |
|
Upper Mid-End |
Detached |
142,934 |
610 |
87.8% |
12.9% |
4.6% |
1.2% |
5.8% |
|
Lower Mid-End |
Detached |
73,803 |
308 |
83.2% |
16.3% |
4.3% |
1.1% |
5.5% |
|
Upper Mid-End |
Apartments |
124,559 |
684 |
84.9% |
15.3% |
5.3% |
0.3% |
5.7% |
|
Lower Mid-End |
Apartments |
95,611 |
489 |
82.3% |
16.0% |
5.3% |
0.9% |
6.2% |
|
Satellite Towns |
Apartments |
77,272 |
411 |
82.7% |
16.5% |
5.6% |
(0.9%) |
4.7% |
|
Residential Market Average |
|
117,865 |
526 |
84.6% |
15.1% |
4.8% |
0.6% |
5.5% |
Source: Cytonn Research
The average rental yields recorded a 0.2% points decline to 4.8% from 5.0% last year, due to reduced rental rates as landlords hoped to attract and retain amidst a tough financial environment.
|
Residential Market Performance Summary: FY’21/FY’20 Comparison |
||||||||||
|
Segment |
Average Rental Yield FY'21 |
Average Y/Y Price Appreciation FY'21 |
Average Total Returns FY'21 |
Average Rental Yield FY'20 |
Average Y/Y Price Appreciation FY'20 |
Average Total Returns FY'20 |
Change in Rental Yield |
Change in Y/Y Price Appreciation |
Change in Total Returns (% Points) |
|
|
High End |
3.7% |
1.1% |
4.8% |
4.2% |
0.0% |
4.2% |
0.5% |
1.1% |
0.6% |
|
|
Upper Mid-End |
4.6% |
1.2% |
5.8% |
4.6% |
0.9% |
5.6% |
0.0% |
0.3% |
0.2% |
|
|
Lower Mid-End |
4.3% |
1.1% |
5.5% |
4.6% |
(0.5%) |
4.1% |
(0.3%) |
1.6% |
1.4% |
|
|
Detached Average |
4.2% |
1.1% |
5.4% |
4.5% |
0.1% |
4.6% |
(0.3%) |
(0.1%) |
0.8% |
|
|
Upper Mid-End |
5.3% |
0.3% |
5.7% |
5.4% |
(0.7%) |
4.6% |
(0.1%) |
1.0% |
1.1% |
|
|
Lower Mid-End |
5.3% |
0.9% |
6.2% |
5.8% |
0.1% |
5.9% |
(0.5%) |
0.8% |
0.3% |
|
|
Satellite Towns |
5.6% |
(0.9%) |
4.7% |
5.4% |
(0.1%) |
5.3% |
0.2% |
(0.8%) |
(0.6%) |
|
|
Apartments Average |
5.4% |
0.1% |
5.5% |
5.5% |
(0.2%) |
5.3% |
(0.1%) |
0.3% |
0.2% |
|
|
Residential Market Average |
4.8% |
0.6% |
5.5% |
5.0% |
(0.1%) |
5.0% |
(0.2%) |
0.7% |
0.5% |
|
|
||||||||||
Source: Cytonn Research
Sub-Market Analysis
In our submarket analysis, we classified the various suburbs in the Nairobi Metropolitan Area into three segments
- High End Segment – Consists of prime suburbs in Nairobi, such as Karen, Runda and Kitisuru. Most of these zones have been zones for low rise residential developments only and are characterized by palatial villas and bungalows on half acre parcels,
- Upper Middle Income Segment – Consists of suburbs such as Kilimani, Lavington, Kileleshwa, Loresho and Ridgeways among others. The population in these zones are middle class but with higher incomes than the average characterization of middle class. They are zones for both high rise and low density houses, and,
- Lower Middle Income Segment – Consists of suburbs in Nairobi habited by middle class such as Kikuyu, Ruaka, Dagoretti, Upper Kabete (Uthiru and parts of Mountain View), and Ngong Road (Race Course, Lenana, Corner), among others.
- Detached Units
The detached market registered improved performance in returns, coming in at 5.4% in FY’21 thus representing a 0.8% points y/y increase from 4.6% recorded in FY’20. The average rental yields came in at 4.2%, 0.3% points lower than 4.6% recorded in FY’20 attributed to reduced rental rates while house prices registered a 1.0% points y/y price appreciation, coming in at 1.1% in FY’21 from 0.1% in FY’20.
In the high-end segment, Runda was the only node that recorded an average y/y price correction of 1.6% attributed to the relatively low uptake which came in at 10.4%, 3.2% points lower than the high-end market average of 13.6%. Notably, all nodes in the high-end segment recorded declines in average rental yields in FY’21 compared to FY’20 with the market’s average rental yield coming in at 3.7%, 0.5% lower than 4.2% recorded in the last financial year indicating low demand for rental units. Kitisuru was the best performing node in the segment with an average total return of 6.5% and the highest price appreciation in the detached market at 2.7% compared to market’s average of 1.1%.
The upper mid-end segment was the best performing segment with an average total return of 5.8% compared to the high-end and lower mid-end segments whose average total returns came in at 4.8% and 5.5%, respectively, attributed to the high rental yield of 4.6% and 1.2% y/y price appreciation. Redhill was the best performing node in the segment with an average total return of 6.5% attributed to the relatively high average rental yield which came in at 5.2%.
In the lower mid-end segment, Ruiru recorded the highest returns at 6.6%, compared to the detached market average of 5.4%, attributed to its relatively high rental yield averaging 5.0% and y/y price appreciation which came in at 1.6%, 0.5% points higher than the segment’s market average of 1.1%. Ruiru’s performance is attributed to being one of the fastest growing satellite towns due to increased commercial and business activities in the area hence attracting residents.
|
Detached Units Performance 2020/21 |
||||||||||||
|
Area |
Average of Occupancy FY'2021 |
Average of Annual Uptake FY'2021 |
Average of Rental Yield FY'2021 |
Average of Price Appreciation FY'2021 |
Total Returns FY'2021 |
Average of Rental Yield FY'2020 |
Average of Price Appreciation FY'2020 |
Total Returns FY'2020 |
Change in Rental Yield (% Points) |
Change in Price Appreciation (% Points) |
Change in Total Returns (% Points) |
|
|
High - End |
||||||||||||
|
Kitisuru |
92.5% |
15.0% |
3.8% |
2.7% |
6.5% |
4.4% |
0.0% |
4.4% |
(0.6%) |
2.7% |
2.1% |
|
|
Rosslyn |
85.9% |
12.1% |
4.4% |
1.1% |
5.5% |
4.7% |
(0.1%) |
4.7% |
(0.3%) |
1.2% |
0.8% |
|
|
Lower Kabete |
81.3% |
16.0% |
2.8% |
2.5% |
5.2% |
3.7% |
(1.2%) |
2.5% |
(0.9%) |
3.7% |
2.7% |
|
|
Karen |
82.8% |
14.4% |
3.8% |
0.8% |
4.5% |
4.1% |
0.3% |
4.4% |
(0.3%) |
0.5% |
0.1% |
|
|
Runda |
90.5% |
10.4% |
3.7% |
(1.6%) |
2.1% |
4.3% |
0.7% |
5.0% |
(0.6%) |
(2.3%) |
(2.9%) |
|
|
Average |
86.6% |
13.6% |
3.7% |
1.1% |
4.8% |
4.2% |
0.0% |
4.2% |
(0.5%) |
1.1% |
0.6% |
|
|
Upper Mid - End |
||||||||||||
|
Redhill & Sigona |
90.9% |
15.4% |
5.2% |
1.3% |
6.5% |
3.4% |
0.1% |
3.5% |
1.8% |
1.2% |
3.0% |
|
|
Loresho |
87.8% |
10.7% |
4.8% |
1.5% |
6.3% |
4.5% |
(0.3%) |
4.2% |
0.3% |
1.8% |
2.1% |
|
|
Ridgeways |
84.5% |
13.4% |
5.2% |
1.2% |
6.3% |
5.5% |
3.0% |
8.5% |
(0.3%) |
(1.8%) |
(2.2%) |
|
|
Runda Mumwe |
85.2% |
14.1% |
4.3% |
2.0% |
6.3% |
4.8% |
0.7% |
5.5% |
(0.5%) |
1.3% |
0.8% |
|
|
South B/C |
94.4% |
14.0% |
4.8% |
1.2% |
6.0% |
5.2% |
0.6% |
5.8% |
(0.4%) |
0.6% |
0.2% |
|
|
Langata |
85.9% |
10.0% |
3.9% |
0.8% |
4.8% |
5.2% |
0.6% |
5.8% |
(1.3%) |
0.2% |
(1.0%) |
|
|
Lavington |
86.1% |
12.9% |
4.4% |
0.3% |
4.7% |
4.0% |
1.6% |
5.6% |
0.4% |
(1.3%) |
(0.9%) |
|
|
Average |
87.8% |
12.9% |
4.6% |
1.2% |
5.8% |
4.6% |
0.9% |
5.6% |
0.0% |
0.3% |
0.2% |
|
|
Lower Mid - End |
||||||||||||
|
Ruiru |
83.9% |
24.9% |
5.0% |
1.6% |
6.6% |
5.5% |
0.3% |
5.8% |
(0.5%) |
1.3% |
0.8% |
|
|
Syokimau/Mlolongo |
75.7% |
16.8% |
4.4% |
2.1% |
6.5% |
4.8% |
(1.1%) |
3.7% |
(0.4%) |
3.2% |
2.8% |
|
|
Juja |
79.6% |
14.9% |
4.6% |
1.0% |
5.6% |
3.8% |
0.0% |
3.8% |
0.8% |
1.0% |
1.8% |
|
|
Kitengela |
92.0% |
15.5% |
4.7% |
0.4% |
5.1% |
5.2% |
0.0% |
5.2% |
(0.5%) |
0.4% |
(0.1%) |
|
|
Rongai |
83.1% |
13.4% |
2.9% |
2.2% |
5.1% |
|
|
|
|
|
|
|
|
Ngong |
84.5% |
12.7% |
5.0% |
(0.2%) |
4.9% |
3.9% |
(1.1%) |
2.7% |
1.1% |
0.9% |
2.2% |
|
|
Athi River |
83.4% |
15.7% |
3.8% |
0.7% |
4.4% |
4.7% |
(1.2%) |
3.5% |
(0.9%) |
1.9% |
0.9% |
|
|
Average |
83.2% |
16.3% |
4.3% |
1.1% |
5.5% |
4.6% |
(0.5%) |
4.1% |
(0.3%) |
1.6% |
1.4% |
|
|
Detached Units Average |
85.9% |
14.2% |
4.2% |
1.1% |
5.4% |
4.5% |
0.1% |
4.6% |
(0.3%) |
1.0% |
0.8% |
|
Source: Cytonn Research
- Apartments
Apartments recorded improved performance with average returns to investors coming in at 5.5% in FY’21, a 0.2% points increase from 5.3% recorded in FY’20. The average y/y price appreciation registered a 0.4% y/y increase to 0.1% in FY’21, up from the price correction of 0.3% in FY’20. However, the rental yields recorded a 0.1% points decline to 5.4% in FY’21 compared to 5.5% last year, attributable to rental rates remaining flat in a bid to attract tenants in the wake of the recovering economy.
The upper mid-end segment recorded a mixed performance with an average price appreciation of 0.7% as markets like Kileleshwa, Kilimani and Loresho experienced price corrections. This is attributable to continued increased supply in the markets thus leading to downward pressure on prices amidst heightened competition among developers.
Apartments in lower mid-end suburbs recorded the highest y/y average price appreciation at 0.9% driven by demand from the growing middle class in Nairobi. Waiyaki way apartments recorded the highest price appreciation at 2.5% attributed to the construction of Nairobi Expressway which boosted property prices in the area. Dagoretti offered the best average rental yield at 6.3% in this segment, indicating the areas demand for renting especially by Nairobi’s working in surrounding commercial nodes such as Kilimani, Upperhill, and Westlands.
In Satellite Towns, apartments recorded the highest average rental yield at 5.6% driven by demand for renting units in satellite towns due to their affordability. This had a downturn on apartment prices which recorded a 0.8% points decline in average y/y price appreciation which posted a price correction of 0.9% attributed to residents opting to rent than to buy hence sellers had to adjust their prices downwards to attract buyers. Ruaka recorded the highest annual total returns at 7.5% supported by a relatively high price appreciation which came in at 2.0%. This is due to continued demand in the area driven by the area’s proximity to upper markets such as Runda and proximity to social amenities.
Waiyaki way recorded the highest returns at 8.1%, compared to the apartment’s market average of 5.5% as well as the highest price appreciation at 2.5% compared to the market’s average of 0.1%. The area’s performance is boosted by the improving infrastructure especially construction of the Nairobi Expressway that will boost property prices even further when complete
|
Apartments Performance 2020/21 |
|||||||||||
|
Area |
Average of Occupancy FY'2021 |
Average of Annual Uptake FY'2021 |
Average of Rental Yield FY'2021 |
Average of Y/Y Price Appreciation FY'2021 |
Total Returns FY'2021 |
Average of Rental Yield FY'2020 |
Average of Price Appreciation FY'2020 |
Total Returns FY'2020 |
Change in Rental Yield (% Points) |
Change in Price Appreciation (% Points) |
Change in Total Returns (% Points) |
|
Upper Mid-End |
|||||||||||
|
Parklands |
84.8% |
14.7% |
5.6% |
2.0% |
7.6% |
5.8% |
0.3% |
6.1% |
(0.2%) |
1.7% |
1.5% |
|
Westlands |
80.6% |
17.7% |
4.9% |
2.0% |
6.9% |
5.2% |
1.6% |
6.8% |
(0.3%) |
0.4% |
0.1% |
|
Kilimani |
87.6% |
23.0% |
5.9% |
(0.2%) |
5.7% |
5.8% |
(2.7%) |
3.1% |
0.1% |
2.5% |
2.6% |
|
Upperhill |
80.3% |
10.1% |
5.3% |
0.4% |
5.7% |
|
|
|
|
|
|
|
Kileleshwa |
86.4% |
16.3% |
5.4% |
(0.6%) |
4.7% |
5.0% |
(3.0%) |
2.0% |
0.4% |
2.4% |
2.7% |
|
Loresho |
89.4% |
10.0% |
4.9% |
(1.6%) |
3.3% |
5.2% |
0.0% |
5.2% |
(0.3%) |
(1.6%) |
(1.9%) |
|
Average |
84.9% |
15.3% |
5.3% |
0.3% |
5.7% |
5.4% |
(0.7%) |
4.6% |
(0.1%) |
1.0% |
1.1% |
|
Lower Mid-End: Suburbs |
|||||||||||
|
Waiyaki Way |
78.8% |
21.7% |
5.6% |
2.5% |
8.1% |
|
|
|
|
|
|
|
Dagoretti |
86.7% |
17.4% |
6.3% |
1.1% |
7.4% |
6.2% |
3.1% |
9.3% |
0.1% |
(2.0%) |
(1.9%) |
|
South C |
86.3% |
14.1% |
5.9% |
1.2% |
7.1% |
6.0% |
0.1% |
6.1% |
(0.1%) |
1.1% |
1.0% |
|
Kahawa West |
78.2% |
10.6% |
5.0% |
1.7% |
6.7% |
5.9% |
(1.4%) |
4.5% |
(0.9%) |
3.1% |
2.2% |
|
Donholm & Komarock |
85.2% |
13.3% |
5.3% |
1.1% |
6.4% |
5.3% |
0.0% |
5.3% |
(0.0%) |
1.1% |
1.1% |
|
South B |
74.3% |
17.5% |
4.0% |
2.3% |
6.3% |
|
|
|
|
|
|
|
Race Course/Lenana |
79.3% |
22.0% |
5.8% |
(0.3%) |
5.6% |
5.3% |
(0.6%) |
4.7% |
0.5% |
0.3% |
0.9% |
|
Imara Daima |
83.9% |
13.0% |
5.2% |
(0.1%) |
5.0% |
|
|
|
5.2% |
(0.1%) |
5.0% |
|
Langata |
88.2% |
14.2% |
4.7% |
(1.3%) |
3.4% |
5.6% |
0.5% |
6.1% |
(0.9%) |
(1.8%) |
(2.7%) |
|
Average |
82.3% |
16.0% |
5.3% |
0.9% |
6.2% |
5.8% |
0.0% |
5.8% |
(0.5%) |
0.9% |
0.4% |
|
Lower Mid-End: Satellite Towns |
|||||||||||
|
Ruaka |
63.7% |
19.0% |
5.5% |
2.0% |
7.5% |
5.5% |
0.1% |
5.6% |
0.0% |
1.9% |
1.9% |
|
Kikuyu |
79.6% |
17.6% |
6.4% |
0.3% |
6.7% |
5.0% |
(1.7%) |
3.3% |
1.4% |
2.0% |
3.4% |
|
Syokimau |
79.0% |
12.0% |
5.2% |
(2.2%) |
6.0% |
5.7% |
(0.8%) |
5.0% |
(0.5%) |
(1.4%) |
1.0% |
|
Thindigua |
79.3% |
12.8% |
4.9% |
1.2% |
6.0% |
5.9% |
2.0% |
7.9% |
(1.0%) |
(0.8%) |
(1.9%) |
|
Ngong |
81.4% |
11.8% |
5.3% |
0.7% |
5.9% |
|
|
|
|
|
|
|
Kitengela |
90.0% |
10.0% |
5.1% |
(2.8%) |
5.5% |
5.1% |
0.0% |
5.1% |
0.0% |
(2.8%) |
0.4% |
|
Athi River |
97.2% |
12.6% |
5.7% |
(1.2%) |
4.5% |
6.1% |
0.0% |
6.1% |
(0.4%) |
(1.2%) |
(1.6%) |
|
Ruiru |
86.4% |
23.8% |
6.1% |
(1.8%) |
4.3% |
4.6% |
0.0% |
4.6% |
1.5% |
(1.8%) |
(0.3%) |
|
Rongai |
87.3% |
28.6% |
6.3% |
(3.9%) |
2.4% |
|
|
|
|
|
|
|
Average |
82.7% |
16.5% |
5.6% |
(0.9%) |
4.7% |
5.4% |
(0.1%) |
5.4% |
0.2% |
(0.8%) |
(0.7%) |
|
Apartments Average |
83.3% |
15.9% |
5.4% |
0.1% |
5.5% |
5.5% |
(0.3%) |
5.3% |
(0.1%) |
0.4% |
0.2% |
Source: Cytonn Research
Section IV: Conclusion, Outlook and Investment Opportunity
We use demand, access to credit, infrastructure and performance, as the key metrics to gauge our sentiment for the sector going forward.
|
Residential Market Outlook |
|||
|
Measure |
FY’21 Experience and Outlook Going Forward |
2020 Outlook |
2021 Outlook |
|
Demand |
|
Positive |
Positive |
|
Access to funding |
|
Neutral |
Neutral |
|
Infrastructure |
|
Neutral |
Positive |
|
Performance |
|
Neutral |
Neutral |
For the key metrics that have been used to determine the performance of the sector, two are positive, that is, demand and infrastructure, and two are neutral that is, access to credit and performance. Thus, our outlook for the sector is NEUTRAL. For apartments, the best opportunity is investment in areas such as Waiyaki Way, Parklands, Ruaka and Westlands driven by returns, appreciation as well as state of infrastructure and amenities; for detached units, the best opportunity is in areas such as Ruiru, Kitisuru and Redhill, driven by uptake and the current performance in terms of returns to investors. For more information, see the full report.
Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication, which is in compliance with Section 2 of the Capital Markets Authority Act Cap 485A, is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor.
