Top 6 areas to invest for apartments in Nairobi, according to a top Kenyan investment firm

These are the areas that yield good returns for apartments

The investment management firm said the development is attributed to good infrastructure and easy access to business nodes.

"Apartments registered higher returns to investors of on average 8.7%, 0.5% points higher than the market average of 8.2%. This is attributable to high demand for high rise units, mainly due to their affordability," Cytonn said in itsNairobi Metropolitan Area Residential Report 2017/2018

Ruaka, Upper Kabete and South B/C took fourth, fifth and sixth positions respectively for apartment development with average returns of 11.1%, 11.9% and 10.1% respectively.

Karen, Runda Mumwe and Ruiru on the other hand are the best areas for detached units’ development.

Subdued returns

Even then, the performance of these units recorded subdued returns in 2018 with average total returns of 7.6%, 0.6% points lower compared to the market average of 8.2%.

This being attributed to among other things a drop in price appreciation and competition in the market as investors selling old stock have had to reduce their asking prices to compete with the new affordable stock.

Cytonn noted that some of the factors that will continue to drive the residential sector are an attractive demographic profile, increased household incomes, improving infrastructure, and government incentives and initiatives such as the inclusion of Affordable Housing as part of the Big 4 Agenda.

Increasing land costs, inadequate infrastructure in some areas and limited access to funding in the private sector for both developer and home-buyer financing are still some of the key challenges in the sector.

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