Money Markets
By JOHN GACHIRI
In Summary
- Budget limits by multinational corporations, embassies and NGOs is said to be one of the major reasons for the freeze in rents.
Rent for properties in Nairobi’s luxury market has
remained flat as prime clients such as multinational corporations are
reluctant to pay landlords more, property consultancy Knight Frank said.
The Knight Frank Prime Global Rental Index shows that rents
in Nairobi’s prime areas, with a monthly average rent of Sh427,000
($4,270), did not increase in the first three months of 2015.
The index looks at the top five per cent of the
market across 18 major cities. For Kenya, research analysts at Knight
Frank consider a luxury property to be a four-bedroom executive house in
a prime location.
Knight Frank Kenya managing director Ben Woodhams
said budget limits by multinational corporations, embassies and NGOs is
one of the major reasons for the freeze in rents.
“Expatriate staff have housing budgets, beyond
which they must seek approval from their head offices for extra rental
expenditure,” said Mr Woodhams in a statement.
Insecurity has also resulted in tenants preferring houses in gated communities over stand-alone units.
Knight Frank, however, said it expected rents would
rise as more expatriates follow multinationals that are setting up shop
locally and increased activity in the mining, oil and gas industries.
“These will also likely boost uptake of luxury residential rentals,” says the Knight Frank Prime Global Rental Index.
A similar report by real estate consultancy Hass
Consult, however, said there were marginal increases in Kenya’s property
market over the first three months of the year.
The Hass Composite Letting Index shows that rents
in Kenyan suburbs increased by 1.4 per cent over the first three months
of the year.
“Rents rose in quarter one across all segments, but
most strongly for semi-detached houses at 2.2 per cent, however,
overall rent rises slowed down, subdued by stable asking prices for
apartment rents, up just 0.4 per cent in quarter 4 2014,” said the Hass
report for the first quarter.
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