Kenya has an annual housing demand of 250,000 units with an estimated supply of 50,000 units. This leads to a huge deficit in housing.  This deficit and the growth of the middle class have led to increased demand for quality real estate.

Nairobi takes a huge chunk of this deficit. This presents an opportunity to make good returns on real estate.

Most landowners do not have access to capital to develop their vacant land. But, we have developers with capital, but not enough to buy land and build on it. This is because the prices of land available for sale in Nairobi have sky-rocked in the last few years. It is becoming difficult for both land owners and property developers to develop Real Estate Projects.

This is where joint ventures come into play. A joint venture is a business arrangement under which two or more parties come together to undertake a project. This leads to the parties pooling their resources together.

We recently wrote about how real estate agents’ commissions can be determined.

Real Estate Joint Ventures: How to determine the real estate agent commission.

Today I share some of the locations which are hot spots in Nairobi when it comes to Joint Ventures. While the spots are all good for investment, the attractiveness varies. Some factors relied on include factors like location, size and terms offered.

Before we dive in, remember to read about the importance of letters of Authorization to source real estate. We also provided Letters of Authorization to sell Real Estate. This helps to ensure the real estate agent and their partner work with set agreements to avoid conflicts.

In Nairobi suburbs, most joint ventures have taken the form of gated communities with stand-alone units. In the list of joint venture hotspots below, flats are preferred. This because flats use less surface area of land is during construction. This allows for several housing units can be constructed within a small land size.

Now, let’s dive into the 10 most profitable joint venture locations in Nairobi.

 1.     Parklands.

The name parklands arise from the proximity of the area to City Park, Nairobi. During Kenya’s colonial days, the British demarcated the area as a residential neighborhood for civil servants. During the 1940s and 1950s Parklands was one of the most congested suburban areas of the Nairobi metropolitan area.

Currently, Parklands has become synonymous with the Asian community. Parklands’ proximity to Muthaiga Mini Market, Westgate, Sarit Centre, Diamond Plaza, and the Village Market add to its affluence. Most joint ventures in this area have been mixed commercial/residential buildings.

Rent ranges from Ksh 30,000 for a one-bedroom apartment and Ksh 150,000 for a 3-bedroom apartment. For property for sale, a one-bedroom apartment can go on sale from Ksh 8M with a 3-bedroom fetching upwards of Ksh 20m.

2.     Kilimani

Kilimani is home to Nairobi’s newest buildings and beautiful skyscrapers. The estate is located approximately 4 kilometers, away from the Central Business District.  In the past, this estate was dotted with multiple single dwellings. The old houses and bungalows are coming down to give way to apartments and tall buildings. Kilimani has become more populated thanks to the rise in commercial property, retail space and residential houses.

Rent ranges from Ksh 50,000 for a one-bedroom apartment and Ksh 150,000 for a 3-bedroom apartment. For property for sale, a one-bedroom apartment can go on sale from Ksh 8M with a 3-bedroom fetching upwards of Ksh 20m.

 3.     Pangani

Pangani is a leafy, upper-middle-class neighborhood in Nairobi. It is made up of mainly single-family homes, with some high-rise apartments and townhouses.  In Ngara, the government is trying to put up several affordable housing units.

Due to its proximity to Nairobi CBD and ease of transport Pangani developments will always be in demand.

4.     Westlands

Westlands was majorly a residential neighborhood during the colonial period for the then well-to-do society. In the early 2000s, land for residential and office space purposes in Nairobi’s CBD became exorbitantly priced. Most companies with their headquarters in the CBD started moving.

Westlands became one of the better options for businesses owing to its urban feel, cheaper land rates and proximity to the CBD. Soon after, the real estate in Westlands grew, attracting not only businesses but the residential market as well.

Westlands enjoys proximity to major international organizations like the United Nations and the African Union. Demand for housing and land will always be there in this neighborhood.

5.     Lavington.

Lavington is one of the major suburbs with high-end residential mansions. The neighborhood radiates peace, calmness, and tranquility. With the presence of different schools, a variety of restaurants and fun activities to do with family and friends, Lavington is bursting with so much personality.

6.     Kileleshwa

Kileleshwa suburb has its name fleshed from Leleshwa, a Maasai word for a tree dominant in Naivasha.

Located approximately 5 kilometers from the Nairobi CBD, Kileleshwa is one of the lushest estates in Nairobi County. Most housing units are flats, maisonettes, and gated communities.

7.     Upper hill

Construction has seen a major upswing in this area in recent years, dotting the neighborhood with skyscrapers. In 2017, for instance, work started on the tallest building in Africa. Upper Hill is a busy neighborhood with restaurants filled with office workers and bars with people winding down after a long day at work.

 8.     South B and South C

South C lies next to Wilson Airport and is bordered by South B to the East, Langata Estate to the west and the Nairobi National Park to the south. Here, houses here are in high demand due to the estate’s closeness to the Nairobi CB. Rentals in South C are quite pricey vs other Nairobi estates along Mombasa Road.

South C has all kinds of residential units such as single rooms, bedsitters, one-bedroom, and two-bedroom apartments that are for rent and sale, maisonettes and gated communities.  Most housing units are maisonettes and gated communities.

South C is inhabited majorly by Somalis, although other Kenyan ethnic tribes can also be found within the estate.  It houses people from all walks of life too e.g. Business leaders, expatriates, students, etc.

9.     Eastleigh

Nairobi’s Eastleigh neighborhood hosts one of the largest ethnic Somali communities outside Somalia. The largest population is Kenyan Somalis as well as Somali nationals. Other communities flock to this area for business. Whether during the day or at night, Eastleigh has always been a burst of activity.

Eastleigh has become an important center of Somali diaspora life and a hub for a trust-based trading community that operates across East Africa and into Asia and the Middle East. Demand for commercial real estate is at an all-time high with importers particularly in textiles setting up shop here.

10.  Ngong Road

Ngong road neighborhood is one of the most sought-after neighborhoods in Nairobi.  Ngong road is especially known for its malls, commercial buildings, business and car dealerships. Commercial rentals earn more than residential rentals.

Ngong road has always been one of the richest neighborhoods in Kenya. The recent road expansions have just enhanced the appeal.

Conclusion:

The benefits of forming a real estate joint venture in Kenya include several advantages for the business partners. These benefits could include the ability to scale the venture rapidly; the ability to combine the skills and resources of the partners; the potential for economies of scale; the potential for leverage; and the ability to take advantage of economies of scope.

There are different types of properties to choose from when venturing into real estate joint ventures. There are houses, apartments, commercial buildings, and even teaming up to sell vacant land. Each type of property has its advantages and disadvantages. So before investing, make sure you know what kind of property you want to invest in.

These above neighborhoods are generally in high demand and you have a good chance to close a deal when you target them. However, do not ignore other areas for joint venture opportunities in Nairobi. Our advice is to give these areas 80% of your energy to improve the chances of success.