Kitengela is one of Nairobi’s satellite towns where demand for land is high. FILE PHOTO | NMG
Land prices in six satellite towns around Nairobi rose by double digits last year, giving holders an annual return that
matched those on high-yielding government bonds that were the preferred option for investors in a difficult investment market.New land price data compiled by realtor HassConsult shows that the price of an acre in Ngong appreciated by 21.4 percent in 2023 to Sh35 million, while in Thika, an acre rose by 17.8 percent to Sh27.2 million. In Syokimau, the price of an acre of land appreciated 15.8 percent to Sh32.7 million in 2023.
Three other towns, Mlolongo, Kitengela, and Athi River, recorded price increases of between 10.5 and 10.9 percent in the year.
In comparison, government bonds issued in 2023 paid investors between 12.9 and 18 percent in interest, while the one-year Treasury bill yield ranged between 10.4 and 15.9 percent.
Read: Ngong upsets Syokimau in list of pricey satellite towns
Equities meanwhile had a negative return, partly on account of foreign investor flight to Western markets and a weakening shilling that exposed dollar investors to exchange losses.
The Nairobi Securities Exchange (NSE) shed Sh554 billion or 28 percent of its investor wealth in 2023.
The satellite towns have over the past few years recorded higher demand for land—and, therefore, higher prices— on the back of easier access that has made them an ideal stop for middle-class Kenyans looking to build their own homes on affordable land without losing the convenience of access to the city.
The highest returning satellite towns, which had previously been shunned by the middle class due to difficulties in access, have benefited from major road works carried out in the past decade.
The works include upgrades to main arteries such as Mombasa Road, Thika Road, and Ngong Road, as well as interconnecting roads between the towns themselves.
“Satellite towns that are served by better access infrastructure along the Thika Road, Mombasa Road, and Ngong Road arteries continued with their steady price growth on both quarterly and annual basis,” said Sakina Hassanali, HassConsult’s head of development consulting and research.
“Growth of land prices in satellite towns continues to outpace that of suburbs on higher demand as the cost per acre is within reach of more commercial and private developers.”
In the city’s suburbs, land prices also recorded significant improvement last year, even though the high price threshold per acre meant that there was limited room for cost growth in several areas.
The HassConsult data shows that prices in the last quarter of the year went up by 3.3 percent, the fastest pace of growth in nine years, while the annual growth stood at 3.96 percent.
Fourteen out of the 18 suburbs recorded positive price movement in the quarter, led by Muthaiga, Ridgeways, and Loresho, whose growth rate stood at 3.7 percent, 3.6 percent, and 3.1 percent, respectively.
On an annual basis, Loresho led the suburbs at 11 percent, followed by Lang’ata and Spring Valley at 10.9 percent and 10 percent, respectively.
“Instructively also, the average price per acre in the suburbs has now crossed the Sh200-million mark, helped by the fast rise of prices in areas such as Lang’ata, Ridgeways, Loresho, Muthangari which offer a mix of affordability, ease of access, and mixed-use zoning,” said Ms Hassanali.
The city’s costliest land was found in Upper Hill, Westlands, Parklands, and Kilimani, where an acre sells for more than Sh400 million.
Upper Hill saw its price per acre drop by 2.6 percent last year to Sh478.2 million, reflecting reduced demand for commercial office space.
Read: Runda, Spring Valley cut house prices 10pc as buyers flee to satellite towns
In Westlands, the price of an acre rose by 1.6 percent to Sh456.7 million, while Kilimani and Parklands saw price increases of one percent and 0.6 percent to Sh406.2 million and Sh402.3 million, respectively.
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