Development in infrastructure registers modest growth in rental houses outside the CBD

Infrastructural development
in suburbs outside the Central Business District have triggered high growth
rate in rental housing.

This is according to an index report by HassConsult Ltd,
released on Tuesday at Sarova hotel
Nairobi.

“Growth in the suburbs was driven by Kitusuru and Lorsho,
which continue to benefit from the completion of the Waiyaki Way-Red Hill road
link, which has made the suburbs more accessible,” read the report in part.

The demand for low middle-income housing has also, in recent
past, increased as a result of high cost of living and uncertainties in the
economic environment.

The report further states that, satellite towns with
affordable and modern housing units are more favourable for ‘bargain hunters’,
looking for affordable housing units.

The third quarter of 2019 indices shows an increase in
asking prices for rent in Thika, Limuru, Mlolongo, Tigoni, Ongata Rongai,
Kitengela and Ruaka metropolis between July and September.

Thika town recorded a 1.3 percent rise in asking rent price,
which is a double-digit increase in apartment rents on annual basis.

“Annual rents for apartments in Thika increased by 13.3
percent on an annual basis, which is the strongest growth in the satellite
towns, while Tigoni recorded the strongest growth for house rents over the
quarter at 3.5 percent,” read part of the report.

Standing at Ksh.23,400, the average rents for apartments in
Thika town proves to be the most affordable relative to other towns, which
augers well for tenants who are opting for affordable units as tough economic
conditions persist.

According to Sakina Hassanali, head of Research and
Marketing HassConssult, increase in cost of living has pushed the lower middle
class tenants to opt for less expenditure on rent compared to transport.

“Notably, as the cost of living soars, the lower middle class
is opting to pay slightly more in transport but less in rents,” said
Ms.Hassanali.

Areas that recorded a degrease over the quarter include
Kiserian, which reduced at the rate of 4.6 percent, Athi River, which recorded
the lowest annual growth rate at 4.1 percent, and Loresho with a drop of 2.7
percent over the quarter and 3.5 percent over the year. Juja dropped at 7.8
percnt.

The best performing suburbs were Parklands, recording an
increase of 1.9 percent over the quarter and 9.3 percent annually, Ridgeways
(at 3.9 percent).

Generally, the asking rents dropped by 0.9 percent over the
quarter but marginally increased by 0.8 percent on an annual basis.

“On the sales front, asking prices marginally rose by 0.9
percent in the quarter led by the semi-detached housing segment, which
increased by 3.4 percent over the period,” report.