Land investment in towns outside Nairobi most profitable

Fourteen satellite towns surrounding Nairobi City have emerged as the best performing markets for land investment with returns outstripping those within the capital’s suburbs areas.

According to Hass Land Index for the fourth quarter of the year ending December 2021, if you investment Kshs. 1 million in the 14 satellite towns in 2007, the land would be worth Kshs. 9.16 million today, Kshs. 6.32 million if invested in 18 suburbs within Nairobi and Kshs. 2.46 million if invested in property.

Investor would also earn Kshs. 3.13 million more if they invested the same amount in bonds and Kshs. 1.48 million if invested in savings and a paltry Kshs. 0.35 million return if invested in equities.

The fourteen satellite towns which include Athi River, Juja, Kiambu, Kiserian, Kitengela, Limuru, Mlolongo, Ngong, Ongata Rongai, Ruaka, Ruiru, Syokimau, Thika and Tigoni have had land values increase 9.61 fold since December 2007 compared to Nairobi suburbs where land values have increased only 6.32 fold despite being priciest.

The report indicate that the average value for land has gone from Kshs. 2.4 million in December 2007 to Kshs. 23.5 million in December 2021.

Ruaka has the highest land value where an acre will cost you an average of Kshs. 89.1 million followed by Kiambu town with Kshs. 39.3 million, Mlolongo Kshs. 31.4 million and Ruiru Kshs. 26.9 million.

Nairobi-18 suburbs which include Donholm, Gigiri, Karen, Kileleshwa, Kilimani, Kitisuru, Langata, Lavington, Loresho, Muthaiga, Nyari, Parklands, Ridgeways, Riverside, Runda, Spring Valley, Upperhill and Westlands have had the average value for an acre of land go up from Kshs. 30.3 million in December 2007 to Kshs. 191.1 million in December 2021.

HassConsult Head of Development Consulting and Research Sakina Hassanali has however noted that that the Kilimani suburb continues to cool as investors go slow on the area due to uncertainty on whether the present infrastructure will support the new wave of developments the area is now attracting, thus weakening its appeal.

“A few years ago, it was the exception for a residential building to have a lift but today it is the norm. The new developments are high density units including studio apartments which is a shift from the ample apartments and detached houses that the characterized the suburb a decade ago and it is not clear if the present infrastructure will adequately cater for all stock coming through,” said Hassanali.

Land prices in Kilimani recorded an annual drop of 1.1% drop with an acre now averaging Kshs. 409.4 million.

Spring Valley is the best performing suburb over the quarter and annually with land prices recording a 5.6% and 10% increase respectively as an acre now averages Kshs. 191.9 million.

Upperhill which has had price of an acre increase 1.78 fold within 10 years is the most expensive suburb at Kshs. 507.6 million per acre followed by Westlands with an acre costing an average of Kshs. 428.5 million after a 1.84 fold increase within a decade.