Land prices in the Nairobi’s Satellite towns have experienced their slowest growth in overt a year, signaling a cooling market as the economy headwinds challenge potential buyers. According to the HassConsult Land Price Index for the fourth quarter of 2024, land prices in these towns have expanded by only 1.9%, down from a 3.03% in the previous quarters. This marks the most subdued growth since June 2023, with demand from the middle-class buyers warning amid high interest rates and financial constraints.
A Cooling Market In Satellite Towns
HassConsult’s report reveals that 9 out of the 14 tracked satellite towns recorded a declaration in price expansion during the quarter. Thika and Mlolongo, previously market leaders in growth, saw their price growth plummet from 6.3 % and 6.6% in the third quarter to 0.9% and 1.1 %, respectively. Meanwhile towns like Kiambu (-0.3%) and Ngong (-0.2) recorded a negative growth. Other notable declines were observed in Ruiru, Syokimau, and Kiserian, all experiencing sharp reductions in price growth.
Sakina Hassanali, Head of Development Consulting and Research at HassConsult, attributes the trend to tough economy. “Periods of economic uncertainty and slowing GDP growth can lead to developers delaying land acquisitions, thus reducing demand, which drives prices higher,” she explained.
Satellite towns like Thika, Kiserian, and Mlolongo have previously enjoyed robust growth due to infrastructure developments, attracting both private and commercial property developers. However, this infrastructure-led price boost seems to be fading. The sharp price jumps seen in these areas in prior quarters have now flattened, highlighting the limited impact of infrastructure projects on sustaining long-term demand.
Nairobi Suburbs Hold Steady
While satellite towns cooled, land prices in Nairobi suburbs showed resilience, growing by 1.7% in the fourth quarter, up slightly from the 1.6% growth recorded in the previous quarters. Parklands (3.4%), Upperhill (3.3%), Spring Valley (3.1%), and Kileleshwa (3.0%) led the suburbs in price appreciation, driven by consistent demand for prime urban plots.
Spring Valley also emerged as a standout performer annually, with land prices increasing by 14.97% over the past year. In contrast, Kitusuru recorded the lowest quarterly growth at -1.53%.
Comparative Trends
The satellite towns’ average annual price growth of 10.62%, while still significant, has been overshadowed by the previous year’s double-digit expansions. Juja recorded the highest quarterly increase at 4.15%, while Kiserian led in annual growth at 18.10%. Conversely, Kiambu and Ngong experienced declines in their land values over the same period.
Economic pressures
The slow growth in satellite towns reflects a broader economic reality. High interest rates and inflation have reduced the purchasing power of middle-class buyers, a key driver of demand in these areas. Additionally, developers are facing challenges securing financing for new projects, further dampening demand.
Ms. Hassanali highlighted the importance of economic stability in driving land demands. “Periods of uncertainty are always challenging for property markets. Developers are cautious, and buyers are hesitant to invest in land when broader economic signals are weak,” she noted.”
The cooling land prices in Nairobi’s satellite towns highlights a shift in Kenya’s real estate landscape where economic challenges are dictating market dynamics. While satellite towns struggle, Nairobi’s suburbs remain steady, continuing to attract investors seeking urban plots.
As developers and buyers navigate these uncertain times, a balanced approach focusing on infrastructure, affordability, and economic stability will be critical for rejuvenating demand. With potential for policy interventions and easing economic pressures, the land market could stabilize and regain momentum in the coming quarters.
