Land price rise hits 10-year low on polls, bad economy

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Land prices in Nairobi last year grew at the slowest pace in a decade, affected by the prolonged electioneering last year amid a slowing economy and lack of access to credit.

Realtor HassConsult says in its 2017 quarter four price index report that land price in Nairobi suburbs only increased by 3.3 per cent while that of satellite towns was up by 5.4 per cent, both the slowest since the index began in 2007. 

HassConsult head of development consulting and research Sakina Hassanali said the slowdown in price growth indicated the value of land is no longer immune to political risk, having previously been seen as a safe haven investment whenever there was political or economic uncertainty.

“If you look at the overall trend in the last five years, land prices have been growing but at a decreasing rate. It was exacerbated last year due to the uncertainty in the economy. It is only in areas where we have infrastructure coming up that we see prices going right back up,” said Ms Hassanali.

“Land has traditionally defied political risk which is short term but the repeat poll introduced a new level of risk which had not been priced in the market.”

She added that while the price of land in the past five years has stabilised much more in the suburbs compared to satellite towns, in times of uncertainty the satellite towns tend to be affected more.

The index report shows that the best performing suburb was Donholm at 12.2 per cent, which was boosted by the near completion of the new Outer Ring Road that has eased transport to the area.

Among satellite towns, Kitengela recorded the highest price increase at 16.6 per cent, similarly benefitting from improved infrastructure and relatively affordable land compared to other satellite towns.

On rental yields and house prices, the asking prices for houses on average dropped by 4.1 per cent during the year.