NAIROBI, Kenya, Feb 17 – The City Council of Nairobi on Thursday announced plans to impose a rent increase for its houses in the city.
Speaking during a tour of council estates in Kariokor and Ngara, Town Clerk Philip Kisia said the move will follow an evaluation based on the current market value of their properties.
"Here in Kariokor, we collect about Sh8,500 for a three bedroom house. In Ngara Estate that is actually in the CBD we collect about the same amount of money and really this is no value for our properties," he stated.
The Town Clerk says with costs rising and their properties appreciating in value, it needs tenants to help fill their budget gap.
"Does it really make any commercial sense? It doesn\’t so that must be reviewed. We are going to re-assess our assets and determine what we are going to do with them. We cannot sit on a gold mine and continue incurring alot of debts."
Mr Kisia said the evaluation will be done before the new rents are announced.
"In the past, we have not been looking at the market value. When formulating the budget, the Treasury has used the incremental way of creating a budget, that this year it was X and then next year, it will be nice to add 5, 10, 20 or 30 percent. That is not how you do business. You must look at the market value then peg yourself somewhere in between," he said.
The Town Clerk further explained that the additional revenue will be used to improve services in city estates.
"If we continue conducting business the way we have done, we will go nowhere. I am not saying that we are going to effect the increase tomorrow," he assured.
"It is now more urgent than what it was before that we look at what we are getting from our assets. These are assets that are a part of the CBD. How on earth can we have a return of Sh20 million per year on an asset valued more than Sh1 billion?" he posed.
According to HassConsult, Kenyan property prices rose an average 5.8 percent last year.
The real estate agency said that although the exponential growth that took place in 2007 to 2008 was not expected, that was sign that the property market is moving into a steady level of growth in an increasingly sophisticated market.
It said the average price of a stand-alone houses gained 9.7 percent to Sh29.01 million in major urban centres.
Town houses increased 4.8 percent to Sh16.8 million and the average price for an apartment slid 3.4 percent to Sh10.7 million in the year because of oversupply, it said.
According to the consulting company, the Kenyan market was absolutely exceptional in global terms in not experiencing sharply falling property prices in 2008.
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