A new report by real estate firm Hass Consult has named five Nairobi estates where landlords enjoyed higher rental income despite a weakening Shilling.
The report covering the fourth quarter of 2023 released on Monday showed that landlords within parts of the city attracted higher returns on their rented property.
Ongata Rongai led in return on investment recording a 15.4 percent profit margin annually followed by Athi River (15 percent), Kitengela (11.6 percent), Loresho (11.5 percent), and Nyari (9.9 percent).
Hass Consult observed that the higher returns were realized despite a weaker currency which made the property market attractive to foreign investment.
“Although the weaker currency raises input costs for developers on ongoing and future projects, it makes the Kenyan property market attractive to foreign investment, buoying asking prices due to augmented demand from these investors,” Sakina Hassanali, Head of Development, Consulting and Research at Hass Consult stated.
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These returns competed favourably with those of Treasury bills and bonds whose net returns ranged from 9.5 percent to 17 percent in 2023.
“Concerns about the safety of bonds due to the government’s high debt exposure however saw some investors seek alternative investments, which included property,” added the report.
“The property returns from the best-performing satellite towns and suburbs also outperformed the NSE 20 Share Index, which had a return of -9.4 percent in 2023, and bank savings that averaged 3.8 percent in interest through the first 10 months of the year.”
According to Hass Consult, Kenyans purchased properties at increased prices in the fourth quarter of 2023 as the weakening shilling affected the cost of materials.
This was evident in all 18 city suburbs which recorded higher returns for all house purchases.
Langata led followed by Ridgeways and Spring Valley, while in the satellite towns, Juja, Kitengela, and Athi River were top performers during the quarter.