A section of Upper Hill in Nairobi. FILE PHOTO | NMG
Summary
Upmarket Karen estate in Nairobi has the highest percentage
returns to commercial rental buildings, a report by Cytonn Investments
research arm says.
Karen rental yield or return stands
at 10.8 per cent with each square foot averaging Sh117 compared to
Westlands’ 10.0 per cent yield and a price of Sh111 per square foot.
The
investment firm said Upperhill rental yield had fallen to 9.0 per cent,
which is below the average of 9.5 per cent for commercial properties in
Nairobi, Mombasa Road and Thika Superhighway.
The
analysts pointed out that Upper Hill’s appeal had slumped due to traffic
congestion and lack of enough amenities along its key ways such as
Ngong Road and Mbagathi Way.
“Upper Hill is losing its
appeal as the ideal location for corporate headquarters due to
inadequate amenities and traffic congestion along its key access ways
such as Ngong Road and Mbagathi Way,” said Cytonn.
Upper
Hill recorded a lower rental yield, but its attraction could be
improved by better infrastructure as well as addition of retail and
residential spaces.
“Upper Hill will have to be
reinvented through improvement of infrastructure, and diversification
into other themes such as residential and retail spaces in order to
boost real estate performance in the node,” said Cytonn.
Westlands
had increased attractiveness as a commercial hub relative to Upper Hill
with a rental yield of 10 per cent due to closeness of high standard
social amenities such as schools and malls.
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“In our view, Westlands is a preferred location by corporates as
it is: an upper middle-income neighbourhood and is in close proximity
to other high-end neighbourhoods such as Loresho, Parklands and
Springvalley, its proximity to Diplomatic Police Unit, and has a wider
range of high standard social amenities such as schools and malls,
including Sarit Centre and Westgate,” the researchers said.
Thika Road and Mombasa Road had the lowest returns for investors at 8.7 per cent each.
In terms of occupancy as at the end of September, Nairobi’s central business district had the highest level at 92.1 per cent.
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