Luxury property prices in Nairobi grew at a much slower rate than a year ago, as the country's security situation impacted on the top-end market in the year to June.
The second quarter Prime Global Cities Index by Knight Frank, which tracks 32 key cities worldwide, shows prices for luxury houses increased by four per cent in the period compared to 8.4 per cent in the year to June 2013.
As a result, Nairobi has slid to position 17 in the ranking from 11 mid-last year.
Prices for trophy houses, which are treasured by high net-worth individuals, only rose by 1.3 per cent in the last six months and a mere 0.3 per cent from April to June.
In mid-2012, Nairobi was ranked third after Bangkok and Jakarta with a 21.8 per cent price increment, meaning the current growth is barely a quarter of the 2011/12 period.
The market segment has largely been affected by an unstable security situation particularly in the Coast region, which has stretched to the rest of the country.
“International investors confidence is low at the moment. There are very few international buyers compared to the periods before the Westgate incident,” said Ben Woodhams, managing director of Knight Frank Kenya.
“That's the problem. The security situation isn’t great.”
Nonetheless, Nairobi’s four per cent annual growth is still above Africa’s 3.2 per cent continental average over the period.
“It’s only a market slow down; not a crash. About 90 per cent of it can be attributed to the security situation which has generated a lot of negative coverage in international media,” Woodhams said.
However, the market is expected to correct once agencies contain insecurity. Already, property owners are bullish and are seeking top dollar for homes in Nairobi’s high-end suburbs such as Karen, Muthaiga, Runda, Roselyn and Westlands.
“Nairobi is a very strong economic hub, and that’s not going away. Companies are opening offices in the FMCG (fast-moving consumer goods) and oil and gas owing to the level of expected growth,” Woodhams said.
“Don’t forget that Kenya is currently getting lots of positive coverage internationally especially following good performance in the Commonwealth Games. Everybody loves Kenya and are waiting to come back. If the security situation stays long enough without incidents, the market will naturally improve.”
Several trophy properties are on sale around Nairobi, with the priciest tagged at Sh600 million for asking.
Ryden International, a high-end real estate market agent, lists an asking price of Sh600 million for the ‘Hogmead’, a luxury residence operating as a boutique hotel on a 10-acre land in Lang’ata’s Mukoma Estate. The property has commercial user licences.
The agent lists another house on sale by the Windsor Golf Club at Ridgeways, off Kiambu Road, at an asking price of Sh400 million. It has four bedrooms and sits on a five-acre site.
Ryden says the property has “great potential for both capital and rental appreciation over time, making this a superb home or investment opportunity.”
A storey four-bedroom family house in Muthaiga sitting on 1.3 acres of “landscaped grounds” has an asking price of Sh245 million. Ryden also lists another four-bedroom house on an acre in a gated estate in Lower Kabete at Sh135 million.