Residential Projects
Vacancy rates soar high amid Nairobi housing boom
High rents have scared away potential tenants who now opt for older flats that are cheaper.
Steeply rising rents have been fuelling an unprecedented housing boom in Nairobi, with developers putting up twice as many homes as they were building a year ago.
Latest statistical figures from the Kenya National Bureau of Statistics (KNBS) show that the value of residential properties built in Nairobi stood at Sh14.6 billion in December 2014 – more than double the value of homes built in January last year, which stood at Sh6.6 billion.
The total value of residential properties built in Nairobi in 2014 stood at Sh120 billion.
The housing boom is accelerating at an alarming rate amid reports that landlords are finding it difficult to attract tenants in several suburbs of Nairobi following increased construction of apartments in the county.
The high lending rates and the steep cost of land in Nairobi have made it costly to build homes in the city, meaning developers must charge high rents so as to recoup their investment within reasonable time-lines.
Most of the apartments target middle-income earners, with average rent for a two-bedroom house being between Sh15,000 and Sh35,000 depending on location.
This has scared away potential tenants who now opt for older flats that are relatively cheaper.
“When you build many houses going for such rent, some will definitely remain unoccupied because there are people who need cheaper houses but will not find them,” says Antony Kuyo, an agent with Avent Properties.
The housing glut, however, is being experienced in the middle-income and some high-income suburbs where most developers have been focusing on in recent years.
It is likely that, in coming years, developers will shift focus to the lower middle-income and low-income housing segment where demand is steeply rising amid nearly zero supply.
The countrywide demand for housing is estimated at 200,000 units annually against a supply of about 45,000 a year. The bulk of this demand is in the low-income market segment.
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