Land prices rise in Nairobi, satellite towns as demand picks up

Land prices in Nairobi are picking up again after a sluggish start to the year, with demand returning to both the city's suburbs and surrounding satellite towns. 

However, while the land market is recovering, the housing market remains divided, with property prices in satellite towns still under pressure as buyers grapple with a tougher economic environment.

Land prices rose across Nairobi and its satellite towns between April and June. According to the latest HassConsult Land Price Index, land prices in Nairobi's suburbs rose by 1.4 per cent during the quarter, up from 0.8 per cent in the first three months of the year.

The increase was driven by stronger demand in areas such as Lang'ata, Karen and Runda, where developers and individuals continue to buy land to build homes.

The recovery was also evident in Nairobi's satellite towns, where land prices rose by 1.4 per cent, nearly three times faster than in the previous quarter.

Ruiru recorded the strongest growth at 4.1 per cent, followed by Thika at 3.8 per cent and Ruaka at 2.8 per cent.

HassConsult said the improvement was supported by Nairobi County's new Development Control Policy, which gave developers greater clarity on planning rules and encouraged new investment.

However, while the land market is gaining momentum, the housing market is recovering at a slower pace.

Property prices in Nairobi's suburbs rose by 0.9 per cent during the quarter to an average of Ksh.33.1 million. Ridgeways, Karen and Lavington recorded the strongest gains.

In contrast, average house prices in satellite towns fell by 0.6 per cent to Ksh.14.5 million, with eight out of 10 towns recording price declines.

The rental market remained resilient, with rental prices increasing by 1.4 per cent in Nairobi's suburbs and 1.1 per cent in satellite towns, reflecting continued demand for housing.

HassConsult said the resilience of the rental market is being supported by Kenya's growing population, rapid urbanisation and low mortgage penetration. These factors continue to support long-term demand for housing even as buyers remain cautious.