Oversupply leads to sharp fall in rent and house prices in Nairobi
An oversupply of prime residential properties in Nairobi is applying pressure that’s forcing buying prices and rents downwards, according to Knight Frank in its Kenya Market Update report for the second half of 2018, which could signal a cooling off in the cost of housing in the capital.
Prime residential prices fell by 4.5% in 2018, compared to a 0.9% drop in 2017, as the segment tilted in favour of buyers. Rents in the top-end of the market also dropped by 1.3% in 2018, although a slower decline compared to the previous year’s 2.8%.
Mr Ben Woodhams, Knight Frank Kenya Managing Director said sustained demand from expatriates and middle-to high-income earners keen on location and quality of houses helped reduce the decline in high-end residential rents.
In the commercial property segment, he noted that the uptake of Grade A office space continued rapidly in the second half of 2018, although prime rents stagnated at Ksh130 ($1.3) per square foot per month owing to the current oversupply.
“This report shows absorption of Grade A office space rose by 63 percent in the six months compared to the first half’s uptake,” he said. “Serviced office providers emerged as major takers, with this occupier type gaining traction due to demand from small and medium-sized businesses for flexible and co-working spaces.”