NAIROBI, Kenya, Oct 30 – Land prices in Nairobi suburbs increased by 0.22 per cent over the third quarter of 2019 while in the satellite towns growth stood at 1.44 per cent.
According to the latest Land Price Index report by Hass Consult, growth in the suburbs was driven by Kitusuru and Loresho suburbs which continue to benefit from the completion of the Waiyaki Way-Red Hill link road which has made the suburbs more accessible.
In the satellite towns Tigoni recorded a 2.89 per cent over the quarter while Syokimau was top on an annual basis with a 10.58 per cent growth.
Going forward developers, buyers and other investors are anticipating that the land market will get a boost should the interest rate cap be removed.
“The real estate sector, like, other segments of the economy are challenged by the lack of liquidity as a result of the amendment of the Banking Act in 2016 that introduced interest rate caps. We have seen access to credit by developers and buyers become difficult as commercial banks have become conservative at lending but we expect this to change should interest rates become market driven,” said Sakina Hassanali, Head of Research and Marketing at HassConsult.
Sakina added that market-driven interest rates will also nudge banks to return to longer dated loans as opposed to the present situation where most loans are short-term.
“Real estate projects tend to be long-term i.e. more than three years and as such when loans are shortened many potential borrowers, be they developers or mortgage borrowers, tend to be locked out of the credit market,” added Hassanali.
On the tail end of the land market, the Gigiri suburb recorded a 2.11 per cent drop over the quarter while Upperhill recorded a 2.55 per cent on an annual basis.
For satellite towns Ongata Rongai recorded a 1.45 per cent drop while Kiambu record a 1.69 per cent increase on an annual basis.