News and Analysis
November 22, 2024
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One of the housing trends witnessed in the Nairobi metropolis since the pandemic has been the construction of smaller units to meet the growing demand for housing.
The high cost of living in the country, coupled with a high inflation rate (6.73 percent as of April 2024) increased taxation, low spending power, and a significant rise in the cost of bank loans - has seen many Nairobi tenants adjust their budgets.
A Kenya National Bureau of Statistics (KNBS) 2020 indicated that Nairobi houses are becoming smaller as landlords seek to accommodate tenants’ housing needs.
Hass Consult House Price Index for Quarter 1 (Q1 - January to March) 2024 shows that in Nairobi's 18 suburbs and 14 satellite towns, only Muthaiga and Ridgeways reported falling rental prices in the quarter.
All the others managed to increase their asking rents, albeit on a smaller scale compared to the previous quarter.
“Although inflation has fallen since the beginning of the year, the economy remains generally subdued, muting growth in rental yields to 6.9% in March from 6.7% in December 2023,” the report says.
Tenants in the rental market also considered other factors, such as accessibility and convenience, other than rent, when choosing where to live- including availability of water and home internet connection.
Thika Road hosts various amenities, from malls, TRM, and Garden City, to schools, including universities, hospitals, and industrial areas.
The Thika Superhighway makes estates accessible, while some can be accessed via the Northern Bypass and Eastern Bypass.
The roads also offer an alternative to the Thika Superhighway, which is affected by traffic snarl-ups during rush hour. A review of rental classifieds pages showed that the average price of a bedsitter for rent is between Ksh8,000 and Ksh10,000, while that of a one-bedroom is Ksh14,000, the cost may go up significantly for premium units.
Estates along or off Thika Road include the satellite towns of Kenyatta Road, Ruaraka, Kasarani, Kiambu Town, Githurai, Ruiru, Juja, and Thika.
Others are Witeithie, Allsopp’s, Zimmerman, Githurai 44, Githurai 45, Roysambu, Kahawa West, Kahawa Wendani, Kahawa Sukari, Ngara, Pangani, Allsops and Garden City.
The upmarket estates in Nairobi are known for their serenity, security, and social prestige. They include Westlands, Lavington, Kilimani, Kileleshwa, Hurlingham, Parklands, and parts of Karen.
Here, the bedsitters and one-bedroom houses vary depending on the estate and the rental agents, with bedsitters starting at over Ksh20,000 and a one-bedroom starting as high as Ksh30,000.
There are also servant quarters which are priced below the apartment units from Ksh10,000 to Ksh20,000.
Ngong Road is one of the most sought-after neighbourhoods in Nairobi. From Ngong Road, one can access key facilities such as the Jomo Kenyatta International Airport (JKIA). This area is known for its vibrant business environment. Malls include Ngong Road Mall, Junction Mall, and Adams Arcade. Hospitals include Kenyatta National Hospital (KNH), Coptic Hospital, and Nairobi Women’s Hospital.
It also hosts several educational institutions, including the International University of East Africa (IUEA) and Daystar University. Other institutions, such as Riara University, can be accessed off Ngong Road.
Estates along Ngong Road can be accessed from alternative routes, including Mombasa Road, Waiyaki Way, and the Southern Bypass.
Bedsitters for rent along Ngong Road range from Ksh15,000, while a one-bedroom costs from Ksh20,000. However, houses and estates near the highway and close to the major malls are premium and the cost can significantly surpass the average.
A tenant can rent a one-bedroom from as high as Ksh40,000 (within a 5-kilometre radius of the CBD) to as low as Ksh15,000 - depending on how far it is from the CBD.
Estates along or off Ngong Road include Jamhuri, Woodley, Karen, Lang’ata, Em-Bul Bul, Kibiko, Dagoretti Corner, Kawangware, Satellite, Kabiria, and Ngong Town.
Read Also: https://www.money254.co.ke/featured/how-to-own-real-estate-in-nairobi-from-ksh5-000-per-month-vk3
Mombasa Road is one of the busiest highways in Nairobi, with estates having a higher accessibility rate after the construction of the Nairobi Expressway which further opened up the region.
Rental prices vary depending on the proximity to the CBD and the highway. Tenants in estates closer to the CBD pay a higher monthly rent.
Bedsitters start from Ksh15,000 onwards, with one bedroom going from as low as Sh18,000 to as high as Ksh32,000 depending on the specific estate.
Estates along or off Mombasa Road include Madaraka, Nairobi West, South B, South C, Imara Daima, City Cabanas, Mbagathi Syokimau, and Katani.
Hospitals along the road include Mater Misericordiae Hospital in South B, Gertrude’s Children’s Hospital (Nairobi West and Embakasi), and the Nairobi West Hospital.
Malls include Capital Centre, Highway Mall, and The Nextgen Mall. Key facilities are the Jomo Kenyatta International Airport and Wilson Airport.
Jogoo Road in Eastlands, Nairobi, hosts most of the famous old-school neighbourhoods, which are currently expanding to accommodate a growing population.
Jogoo Road was previously home to civil servants in previous decades, with most estates built by the then Nairobi City Council (now Nairobi County Government).
Bedsitters along Jogoo Road start from as low as Ksh5,500 to Ksh12,000, with the average one-bedroom house going for between Ksh10,000 and Ksh15,000.
Estates along or off Jogoo Road include Utawala, Makadara, Donholm, Tena, Embakasi, Tasia, Pipeline, Buru Buru, Komarok, Shauri Moyo, Bahati, Jamaa, Mbotela, and Eastleigh (which can also be accessed via Outer Ring Road).
Most estates along Jogoo Road can also be accessed via Outer Ring Road.
Estates along or off Outer Ring Road include Kamukunji (Eastleigh), Umoja, Donholm, Starehe, Baraka, Soweto, and Nyayo.
These estates are approximately an hour from town during off-peak with PSVs available 24/7.
One can access the CBD via the Outer Ring to Mombasa Road, the Outer Ring to Thika Road, or Jogoo Road, offering different alternatives.
Rent prices start from Ksh8,000 for bedsitters to Ksh13,000, with one bedroom starting at Ksh12,000 onwards.
Waiyaki Way residences offer a calm ambience away from the CBD and the estates are 30 - 45 minutes away during off-peak hours.
Estates along or off Waiyaki Way include Kangemi, Mountain View, Uthiru, 87, Kinoo, Muthiga, Regen, and Kikuyu.
Bedsitters range from Ksh7,000 to Ksh12,000, with one-bedroom houses going from Ksh12,000 to around Ksh25,000, depending on the specific location and proximity to the highway.
Read Also: Nairobi Neighborhoods With Highest Investment Returns
Other Nairobi Satellites include Kiambu Road, Ruaka, Wangige, and Gitaru in Kiambu County, Ongata Rongai in Kajiado County, and Kitengela and Athi River in Machakos County.
Machakos and Kiambu counties host some of the fastest-growing satellite towns in the Nairobi metropolis, according to Hass Consult.
Bedsitters in most of these areas range from Ksh7,000 to Ksh12,000 with one-bedrooms costing from Ksh12,000 to Ksh20,000.
Tenants seek to make ends meet, especially with new taxes such as the housing levy, deducted at 1.5% from payslips, plus the upcoming Social Health Insurance Fund charged at 2.75% of an employee's income.
Fares also increased after the government doubled the Value Added Taxation on fuel from 8 percent to 16 percent.
Nairobi also has a high number of students and skilled labourers who seek accommodation thus landlords construct affordable houses to enable them to pay rent while satisfying their basic needs.
The Housing Price Index published by the Kenya Bankers Association (KBA) for Q4-2023 released in April 2024 indicates that the housing market prices, which had declined in the first three quarters of 2023 compared to 2022, eased slightly in the fourth quarter of 2023, largely driven by strengthening demand that started building up in the third quarter.
Apartments, although still dominant, saw a decline in their share of completed transactions, accounting for 40.19% compared to 54.35% in 2022, indicating that tenants were moving to smaller houses.
Hass Consult House Price Index for Quarter 1 (Q1 - January to March) 2024 indicates that rental prices rose 0.4% in the quarter, as the market remained sensitive to tough economic conditions.
Rent, according to economic and finance experts, should account for not more than one-third of one’s salary. The recommendation is supported by common budget rules, such as the 50/30/20 rule.
This effective budgeting principle advises that 50% of income should be allocated to necessities, including rent, mortgage payments, food, health insurance, household shopping, bus fare, debt payments, school fees, and car expenses, and 30% to wants (luxuries), and 20% to savings.
Nicholas Gachara, a financial expert and CEO of Somakazi, says rent should not exceed a third of your salary. Financial advisor William Ramogi and policy expert Duncan Otieno also agree that the 50-30-20 rule should be considered especially while budgeting for basic needs, especially rent.
House hunting can prove to be an audacious task if not well planned. Some tenants end up spending more than they had budgeted for or are scammed by unscrupulous agents. When house hunting, be cautious with online websites, and do not pay until you see the house and are allowed to move in.
Consider moving into an area where you can save on either rent or fare and proximity to work i.e. if you work in Westlands, it's advisable to stay along Waiyaki Way to cut down fare costs and commute time. Families with day school-going children should also consider areas with good schools or closer to the ones attended by their kids.
It is important to assess hidden charges while budgeting for rent i.e. amenities offered by landlords and service charges including cleaning, lighting, water, electricity, insurance, garbage collection, maintenance, repairs, and management costs. Read and understand your lease, especially on deposit - whether you will request a refund or stay on deposit when seeking to move out - and understand your tenant rights before signing the agreement. Ensure rent is not more than one-third of your net income.
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