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House prices contracted by an estimated 0.2 percent in 2020 /COURTESY

Kenya

COVID-19 Leads to Lower Demand For Serviced Apartments within the Nairobi Metropolitan Area – Report

NAIROBI, Kenya, Dec 7 – Serviced apartments within the Nairobi Metropolitan Area have recorded an average rental yield of 4 percent this year, which is 3.6 percent lower than the 7.6 percent recorded in 2019.  

A Cytonn Real Estate report has attributed this to declines in monthly charges per Square meter and occupancies from Sh2,806 to Sh2,445 and from 79.4 percent to 48 percent respectively. 

According to the report, the decline in performance is on account of subdued demand for hospitality facilities and services due to the COVID-19 pandemic.  

The government issued a raft of containment measures among them banning all international flights and local flights and implementing partial lockdown within the area among others. 

To remain in business, some serviced apartments have also been issuing discounts to attract and maintain clients amid a tough economic environment occasioned by reduced disposable income.  

Meanwhile, Westlands -Parklands was the best performing node, recording an average rental yield of 6.1 percent, 2.1 percentage points higher than the 4 percent market average.

This was attributed to the proximity to business nodes such as Kilimani, Nairobi CBD and UpperHill, availability of amenities such as the Westgate Mall and Sarit Centre, ease of accessibility and proximity to the main airports that is Jomo Kenyatta International Airport (JKIA) and Wilson Airport.

Kilimani was the second-best performing node with average rental yields of 4.8 percent compared to market average of 4 percent.

This is however a decline of 4.7 percentage points attributed to 31.6 percent decline in occupancy rates and 20.5 percent correction in the monthly charges per Square Meter.  

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Thika Road (Muthaiga North, Mirema and Garden Estate) recorded the lowest rental yield at 2 percent, and this was attributed to the relatively low charge rates for apartments within the area, given its unpopularity, due to lack of modern and quality serviced apartments in the area, the significant distance from main commercial zones, in addition to security concerns as the area is not mapped within the UN Blue Zone. 

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