Cytonn Investment head of private equity and real estate Shiv Arora on March 23/FILE
It is expensive to own a home in Nairobi – report
High interest rates and land prices are locking out many Nairobi residents from home ownership, a new report on the city’s mortgage and rental affordability indicates.
The survey done by Cytonn Investments covered Nairobi Metropolis as well as satellite towns, comparing household incomes and rent or mortgage payments per month.
The report indicates Nairobi remains a rental town because of expensive housing and land, with developers seeking to build or buy property for rental business.
According to the report, areas such as Nyari, Karen, Runda, Muthaiga and Kitusuru are the most unaffordable mortgage markets with households requiring a minimum of Sh3.1 million to purchase a house through mortgage, despite an average income of Sh1.3 million.
Githurai is the most affordable mortgage market while Embakasi, Githurai, Komarock and Kariobangi are the most affordable for those seeking to rent houses, with the average income in this bracket standing at between Sh50,000 to Sh150,000.
“Factors affecting supply of homes remain land availability, access to funds, construction costs and infrastructure,” said Shiv Arora Cytonn’s head for private equity real estate.
Demand for housing has also been rising, owing to growing incomes that have been low for a long period of time, rapid population growth and evolving preferences among buyers – the report states.
According to the study, land is relatively priced in satellite towns, while infrastructure development such as roads and railway construction are opening up new areas for development.
“Cytonn, for example, just broke ground for a Sh3 billion project in Ruaka, taking advantage of the upcoming bypass,” Arora said.
“The adoption of alternative building technology will also be a game changer, in real estate development, as it has come in to reduce the construction costs and turnaround time for projects, which will make it more affordable to purchase property.”