Kenyans preference for detached units growing – Cytonn Report
In a report released by real estate firm Cytonn, detached units is attracting investors more.
The report themed, ‘A Buyer’s Market amidst A Global Crisis’, reveals that though apartments continue to perform better, they expect to see detached units in the lower mid-end areas attract more interest from buyers.
Apartments registered average total returns of 5.3 per cent, compared to detached units at 4.6 per cent as well as higher uptake and occupancy, which averaged at 19.4 per cent and 86.3 per cent respectively.
Best performing markets
“Runda Mumwe and Ruiru present the best opportunity for detached units driven by relatively high returns of 5.5 per cent and 5.8 per cent, respectively”, said Wacu Mbugua, Cytonn Real Estate’s research analyst
For apartments, Dagoretti, Ridgeways and Thindigua were the best performing markets with average annual returns of 9.3 per cent, 8.5 per cent and 7.9 per cent, respectively.
Also, the report states that Kahawa West and Ngong recorded the lowest returns on account of decline in asking prices in the areas, attributable to loss of appeal as homebuyers opted for other lower mid-end areas with better infrastructure and closer to CBD especially in the case of Ngong.
Ridgeways recorded the highest price appreciation and annual returns at 3 per cent and 8.5 per cent, respectively, compared to the detached markets averages of 0.1 per cent and 4.6 per cent. This is because of the low supply coupled by presence of good infrastructure and amenities as well as proximity to Runda and Muthaiga, which are high-end areas.
Out of the 31 sub-markets, the report ranks Nairobi Metropolis, Ruaka and Westlands as the best opportunity for apartments driven by relatively high uptake at 23.9 per cent and 22.6 per cent, respectively.
Overall, average rental yields improved significantly to 5 per cent from 4.3 per cent last year, indicating sustained demand for rental housing whereas demand for sale houses declined amidst a tough financial environment leading to decline in average price appreciation.
Covid-19 slow down
“In terms of supply, the sector is expected to experience a slowdown in construction activities, due to the pandemic that has resulted in supply chains disruption, reduced revenues for developers coupled by high development costs and insufficient access to credit,” Wacu concluded.
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