Rent In Satellite Towns Rises Steadily Despite General Stagnation

by Business Watch Team

HassConsult has announced results for the Hass property price indices for the first quarter of 2023, showing property prices were static at 0.02 percent.

The performance of the market was mixed within different property segments during this period. Over the quarter, semi-detached house sales prices dropped by 2.4 percent as demand continues to wane.

In contrast, apartments and detached houses on their part saw prices slightly increase by 0.8 percent and 0.7 percent. These increases in prices can be attributed to inflation adjustments in prices coupled with sustained demand, particularly for detached houses.

HassConsult notes that over the last 20 years demand has outpaced supply for detached houses resulting in an increase in sale prices.

“It is worth noting that detached homes now account for only 7.5 percent of the market, down from 28 percent in 2016 and over 50 percent in the early 2000s, while apartments’ market share grew to 64.4 percent and semidetached homes increased to 28.1 percent during the same period,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult.

The average sales price for detached houses has reached 48.7 million shillings, while semi-detached homes are currently selling for 30.2 million shillings. The average sales price for apartments is 15.07 million shillings.

The rental market experienced a decline of 0.5 percent on average over the last quarter, and a decrease of 1.2 percent over the past year.

However, rental price trends in the satellite towns, are bucking the trend. Nearly all towns posted positive growth in apartment rental pricing highlighting the increasing occupancy rate of apartments targeted at renters with a monthly budget between 25,500 and 50,000 shillings.

The demand for affordable rental properties, particularly apartments in satellite towns, has impacted the overall returns, as indicated by rental yields and capital gains. Apartments located in satellite towns recorded average rental returns of 3.4 percent over the quarter and 9.0 percent annually, respectively.

“This trend is being further boosted by the underperformance of other asset classes such as bonds, equities, and fixed deposits, making these apartments an attractive investment option,” added Ms. Hassanali.

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