Money Markets
By JOHN GACHIRI, jgachiri@ke.nationmedia.com
In Summary
- Road network that has opened up Ridgeways including through the northern by-pass is the main reason for the land price appreciation.
- Prices have also risen as a result of the suburb neighbouring the diplomatic blue zone of Gigiri and Runda.
- Current slow appreciation is, however, expected to give buyers a reprieve in the long-term since cost of land as a percentage of the development will reduce.
Plots at Ridgeways and Loresho residential areas have
substantially appreciated as other city suburbs showed signs of cooling
off.
The Nairobi Land Index by Hass Consult and Stanlib
Investments shows between March 2013 and March 2014 the average price of
land in Ridgeways and Loresho increased by 41.4 per cent and 41 per
cent respectively, well above the 17.6 per cent average for 18 suburbs
making up the index.
The report found that the price of an acre of land
in Ridgeways as at the end of March was Sh64.9 million while a similar
plot in Loresho was going for Sh70.7 million. Stanlib regional director
James Muratha said the road network that has opened up Ridgeways
including through the northern by-pass is the main reason for the land
price appreciation.
“The upgrade in infrastructure around this area has really boosted Ridgeways,” said Mr Muratha.
He added prices in the area have also risen as a result of the suburb neighbouring the diplomatic blue zone of Gigiri and Runda.
The latest Nairobi Land Index report, however, said
that while average land prices in major suburbs are still rising, the
pace has generally decelerated.
The average price of land in Nairobi increased by
17.9 per cent in 2014 that is lower than the 42.5 per cent growth seen
2009. The slow pace is a result of major suburbs entering the mature
phase of development.
Mr Muratha expects investors to become pickier on
where to buy land since strong land price growth is not guaranteed for
all suburbs.
“These results highlight the degree to which
selecting the right location for land investments is now critical to
returns. As the index reveals, almost any land purchase across Nairobi
would have made very high returns in 2008 and 2009.”
Land prices in Eastleigh and Runda had annual
returns of 1.5 per cent and 7.5 per cent respectively, that are lower
than other asset classes such as stocks and bonds. Data from the Nairobi
Land Index indicates the average price of an acre in Eastleigh was
Sh292.6 million while an equivalent acre in Runda was priced at Sh67
million.
Karen, Kileleshwa, Kilimani, Langata, Lavington,
Spring Valley, Upperhill, Westlands, Donholm, Gigiri, Kitisuru, Loresho,
Muthaiga, Nyari and Parklands were the other suburbs included in the
report.
Upperhill was the priciest suburb with an acre going for Sh484.8 million as at March this year.
On average prices in Nairobi have increased by
549.9 per cent since 2007. The current slow appreciation is, however,
expected to give buyers a reprieve in the long-term since cost of land
as a percentage of the development will reduce
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