Nairobi’s top residential prices continue to fall
Milliam Murigi @millymur1
Nairobi’s prime residential prices continue to fall although the rate of decline is narrowing, according to Knight Frank Prime Global Cities Index (PGCI) for Quarter One (Q1) 2020.
Prime residential sale prices in the city dropped by 1.03 per cent in the three months from January to March 2020, while prime rentals fell by 2.1 per cent over a similar period.
“The prime residential market continues to suffer from the trends which have affected it for almost two years,” says Anthony Havelock, Head of Agency at Knight Frank Kenya.
“These include tighter liquidity, an oversupply of residential properties in certain locations such as Karen, and continued corporate budget cuts by multinationals,” Havelock said.
Although 2020 had started on a positive note with increased activity, with the global Covid-19 pandemic, expectations are to see prime residential rents and sale prices decline further.
This is because this niche market continues to remain a buyers’ and tenants’ market, he said.
“It is only on the completion of Q2 2020 — and possibly beyond— that we can accurately gauge the full impact of the pandemic on prime housing markets globally,” he added.
He warns that with travel restrictions firmly in place over the majority of the quarter and with the global uncertainty coupled with local challenges, such as land registries being closed, the second quarter will see a marked drop in sales volumes. However, favoured areas are expected to display resilience.
The continued price correction placed Nairobi at the bottom of 46 cities covered by the index, with an annual price decline of 4.5 per cent.
This demonstrates the continued price correction being experienced across the various property sectors in Nairobi.
PGCI is a valuation-based index tracking the movement in prime residential prices in local currency across 46 cities worldwide, using data from the Knight Frank research network.
A look at quarterly shifts provides some indication as to what the potential impact of Covid-19 could be with all five of the weakest performing markets being in Asia in Q1 2020, with Bangkok witnessing the deepest decline at negative five per cent.
The Covid-19 pandemic, the strict travel restrictions in place and the slower global economic growth are all influencing global buyer sentiment.
