Oversupply in Nairobi’s prime residential market led to depressed prices and rents, resulting in declines last year, according to real estate and property management firm Knight Frank.
The Kenya Market Update report for the second half of 2018 by Knight Frank shows prime residential prices fell by 4.5 per cent in 2018, compared to a 0.9 per cent decline the year before.
The report indicates that rents in the high end of the market also dropped by 1.3 per cent last year 2018, a slower decline compared to the previous year’s 2.8 per cent slide as sustained demand from expatriates and middle to high income earners, who are keen on location and quality of houses, helped reduce the decline in high-end residential rents.
Uptake of Grade A office space continued in the second half of 2018, although prime rents stagnated at $1.3 (Sh130 per square foot per month owing to the current oversupply.
The report shows absorption of Grade A office space rose by 63 per cent in the last six months compared to the first half as serviced office providers emerged as major takers due to demand from small and medium-sized businesses for flexible and co-working spaces.
“With increased uptake and a decrease in construction, we anticipate a rental recovery in the medium term,”Ben Woodhams, MD of Knight Frank Kenya said.
In the retail property market, prime rents stagnated at US$5.1( Sh510 /sq ft/month, as the segment adjusted to the existing oversupply in some locations. Occupancy in established malls remained high in the period.Cumulative occupancy for new shopping centre developments ranged at 45-75 per.