Land price rises by 20pc on the Nairobi Expressway lift

Land prices along the Mombasa Road commuter belt and its satellite towns have increased at the fastest rate in the previous six years as a result of the opening of the Nairobi Expressway, creating opportunity for investors in Syokimau, Kitengela, and Athi River.

According to HassConsult's third quarter report, house prices in Nairobi and the surrounding area increased by 10.3 percent in the year to September, reversing a distressing trend that had been present for the previous six years.

Due to better accessibility in the towns from improved infrastructure, the value of land increased by a high of 9.49 percent in the year to September.

Since 2016, when growth stood at 21.39 percent, this increase has been the fastest. This reflects the property market's appreciation over the previous six years as a result of reduced traffic, which has benefited homebuyers looking to settle outside of the busy capital.

However, it is the towns along Mombasa Road that have recorded the greatest increase in land prices since the opening of the Nairobi Expressway, which has made them more accessible to investors and homeowners.

According to the HassConsult report, the average asking price for an acre of land in Syokimau increased by 20.1 percent from last year to Sh27.7 million, with some quoting up to Sh31.6 million.

Buyers looking to invest in Mlolongo will pay Sh33.2 million after the price of an acre increased by 4.6 percent, with the town benefiting from the opening of the Expressway this year and the standard gauge railway earlier this year.

During the review period, land prices in Kitengela and Athi River increased by 11.2 percent and 5.3 percent, respectively.

“Expansion of infrastructure and road projects in satellite towns is easing pressure for Nairobi land property development,” said Sakina Hassanali, the head of development consulting and research at HassConsult.

According to Collins Chacha of Universal Homes, the Expressway has reduced commute time from Nairobi's Westlands, where most offices and potential homebuyers work, to around 15 minutes.

“Before the Expressway, going to Kitengela was very hard and one had to plan their whole day around that event. Now one can commute there in 15 minutes and have several meetings later while at it,” said Mr Chacha.

Daniel Ojijo, chairman of Universal Homes and a real estate expert, believes that rising population and demand for housing in satellite towns are also driving up land prices.

"Another factor is that land on the outskirts of Nairobi is less expensive than real estate in the central business district and within Nairobi," Mr Ojijo added.

Land prices in towns outside of the city increased by 9.49 percent in the year to September, compared to 5.55 percent the previous year. Juja, one of the satellite towns experiencing an increase in plot prices, reached a new high of Sh18.8 million.

According to the HassConsult report, "Juja has benefited from road infrastructure and investors being drawn to develop housing and affiliated property for higher education centers located in the area."

The average price of land in Nairobi fell to Covid levels when growth fell to -2.17 percent in 2020 due to economic headwinds caused by the pandemic.

After years of booming prices, real estate has been hit in recent years by a lack of credit and affordability, as well as the Covid-19 pandemic, which has greatly eroded spending power among prospective buyers.

Land prices in Nairobi fell by -0.13 percent during the review period, compared to a 0.82 percent increase the previous year, due to lower demand for prime real estate.

Property in general grew by 10.3 percent during the same period, as land prices reached new highs.

Townhouses and villas defied the trend, rising 16.6 percent year on year in September due to increased demand, while apartment prices fell slightly by -0.4 percent.

The report revealed stronger price movements in the villas and townhouses segment in the upper suburbs, where there was a high demand for units with ample parking.

The drop in apartment prices indicated that sellers in the highly competitive market were becoming increasingly willing to accept negotiated asking prices.

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