Nairobi prime residential prices fall slightly in H1 2019
Knight Frank’s Kenya Market Update – 1st Half 2019 shows a decline in prime residential rents and sales prices in Nairobi in the H1 2019.
Part of the reason for the decline is an oversupply of high-end developments in some areas coupled with fewer expatriates relocating to Kenya. In addition, a credit crunch has led to low money circulation and spending power due to less disposable income. Furthermore, multinationals are downsizing thus affecting the niche market.
Prime residential prices fell by 1.8% with rents reducing by 1.7% leading to annualized decline of 6.7% and 3.3% in the year to June respectively. Buyers and tenants are benefitting from low prices and low rents.
The shopping mall retail market has recorded a 5.9% decrease in rent to US$4.8 per square foot per month. In H1, occupancy levels in established malls remained high at 90% while new developments (completed in the last 18 months) recorded occupancy levels of between 45% to 55%.
The declining demand for prime retail and residential space has forced landlords to resort to providing concessions. For instance, some offer long fit-out period, partial contribution towards tenant fit-out or giving discounted rentals so as to retain existing tenants and attract new ones.
However, the office market has been performing well on the back of increased demand for shared workspaces and serviced office space. Driving this demand are small and medium enterprises, maturing start-ups, and multinational firms entering the country.