NAIROBI, Kenya, May 6 – The Prime residential prices in the Capital City has slid by 6.5% in the 12 months to March 2019, according to the Knight Frank Prime Global Cities Index for the first quarter.
This stands as the most significant reduction in values in 12 months that Nairobi has ever recorded since the index started recording data.
This has been attributed by continued oversupply as large numbers of new properties flooded the market with few transactions in the high-end residential market.
While approaching March, the luxury home prices softened by half a percentage, a trend that has so far witnessed prices drop remain stable in Nairobi in the eighth quarter since the second quarter of 2017.
The decline in prices led to Nairobi dropping in the ranking to 42nd position out of the 45 sites that were monitored by the global index.
South Africa’s capital city Cape Town was position 19 with an increase of 2.1% in the one-year period and an added marginal drop of 0.1 % in the quarter.
Luxury home values remain at 38% higher compared to 2010 which represents decent capital gains in high-end market category.
Knight Frank head of Agency Kenya Anthony Havelock said they are projecting a decline in the days to come.
“Data tends to lag the market and we believe we will see further drops in the coming months as the market has continued to soften,” he said.
“Owing to the high values of the properties tracked and the current supply levels, plus the ongoing credit crunch, transactions will remain few and staggered unless vendors become realistic on pricing,” he added.
The increase in supply has led to high vacancy levels in rental areas which have increased pressure on rents in the top-end market and reduced prices projected.
Generally, luxury home price growth has slowed worldwide in recent years with the PGCI now averaging 1.3%, the lowest annual rate since the final quarter of 2009 when the world was in the grip of the financial crisis.
Berlin and Moscow were the exceptions in the index, recording double-digit annual price growths of 14.1% and 12% respectively in the year to March 2019, ranking them first and second on the PGCI.
The two cities are among those riding on limited supply and relative affordability.
Canada’s Vancouver was the worst performer in the 12-month period with prime residential prices falling by 14.5%, followed by a 9.9% drop in Istanbul, Turkey.