Apartment oversupply sees rental prices drop
2017 proved a tough year for the country’s real estate sector.
Data from real estate agent HassConsult shows that rental prices across all property dropped by 3.9 percent with apartments recording the sharpest decline both in rental prices and value.
a prolonged electioneering period, coupled with an economic downturn and credit constraints made 2017 a slow year for Kenya’s property market.
As a result asking prices for residential property sale dropped 4.1 percent in the year.
Speaking during the release of its latest property index, HassConsult head of development consulting Sakina Hassanali said oversupply especially of apartments had seen property owners take less in rents to boost uptake.
“Landlords are not pushing rental prices up, and in some cases they may be discounting just to be able keep their tenant,” Ms Hassanali said.
The evident rental decline was witnessed more in apartments, which according to the index reduced by an average 12 percent.
The trend has been attributed to changing demographics with most young families opting for smaller houses than are on the market.
“You’ll see large family sized apartments dropping in rentals just because there is so much supply of such houses in Nairobi, while the demographic of Nairobi is moving to a more younger urban population with not so big families or not even married and with no kids and there no much accommodation for those type,” she said.
Declining rentals are also being felt in Nairobi’s Upperhill area, which recorded the highest drop in to let prices of 9.4 percent on average.
This having been fuelled by the transformation of the area into a commercial at the expense of new residential units.
It is a trend that experts at HassConsult say provides a unique investment opportunity for the country’s realtors.
“Always look at what is least supplied and most demanded, when you have these your capital value will always go up and your rent will always go up because more people want more than what’s available,” Ms Hassanali added.
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