Home > Uncategorized > Rental apartments in Nairobi – why are most of them vacant?

Rental apartments in Nairobi – why are most of them vacant?

I have been house hunting lately, for a 2-3 bedroom apartment in Nairobi. My search was mostly focused in areas around my work place, and with a certain budget in mind.

I have come across many decent apartments, very many. During my search I noticed that most of the vacant units were in the upmarket areas – Westlands, Kileleshwa, Hurlingham, Kilimani..just to mention a few.

apartments image

 

I decided to dig a bit deeper, to understand why exactly this was the trend. My analysis yielded interesting results.

In one search, of 13,164 vacant properties available for rent, 73% were in upmarket areas of Westlands, Lavington, Kilimani, Kileleshwa, Runda and Karen. See the below breakdown:

Westlands 2,955
Lavington 2,328
Kilimani 1,461
Kileleshwa 1,046
Runda 556
Karen 547
Loresho 324
Hurlingham 252
Muthaiga 247
Parklands 127
Gigiri, 60
Kitisuru 53 9956 73%
Rest of Nairobi 3,658 3,658 27%
Total Nairobi rentals 13,614 13,164

In the above search, the source does not differentiate between main houses and apartments. All the same, the findings can be summarised as below;

Image

In a different search, I found that more than 65% of vacant rental apartments in Nairobi are in the aforementioned upmarket areas, with another 15% in areas around Langata, Nairobi south and west and Mombasa road area in general.

Apartments available for rent in Nairobi 1534
Westlands 244
Kilimani 216
Lavington 182
Kileleshwa 126
Riverside, Brookside, Parklands (rest) 233 1001 65%
Rest of Nairobi 533 533 35%
Total rental apartments in Nairobi 1534 1534

This particular source differentiates between main houses and apartments, giving us more accurate results for apartments.

Image

 

Now, why do we have so many vacant rental apartments in these upmarket areas of Nairobi?

The average monthly rent for a 3 bedroom apartment is those areas is around Kshs 90,000/- and Kshs 70,000/- for a 2 bedroom.

Of the 1,534 rental apartments in Nairobi, 1,173 (76%) of them are going for 50k and more in terms of monthly rent. About 1,090 (71%) rental apartments are going for 70k and more in terms of monthly rent.

Not to mention the other highly priced rental apartments in those areas, charging a monthly rent of between 200k and 602k

Supply vs demand

In an ideal marketplace, the price for a good or a service is determined by the forces of supply and demand. In a competitive market, the price of a good will vary and settle at a point where the supply of that good equals the demand for it.

In Nairobi we are at a time when the supply of rental apartments outstrips the demand for them. Ideally the property owners could lower the rent they charge to attract more customers. This is however debatable, with so many other factors in play such as return on investments and market value of the property.

In another post, I will look at the value of apartments, in particular those available for purchase.

In the meantime have your say, why do we have so many vacant apartments in the upmarket areas?

Source: OLX and the Rocket Internet owned real estate marketplace, Lamudi.

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  1. April 24, 2014 at 12:30 pm

    I can certify for one of these areas. On my block, (hosts about 20 apartments) about 5 of them are vacant, and have been for as long as two months.

  2. April 24, 2014 at 1:17 pm

    Nice post! I am very interested to see if there is a relationship between the number of vacant housing in these upmarket areas and the attitude of Kenyans towards such areas. I wonder if maybe, most people think that these areas are predominantly residences of expats and offer housing at ‘expat prices’ as opposed to other areas in Nairobi that are viewed as cheaper.

    • Olive
      April 25, 2014 at 3:22 pm

      Muthonility: but they do offer houses at expatriate rate. Who will pay a thousand dollars in rent, when the majority are living on less than a pound a day?

  3. April 24, 2014 at 1:33 pm

    There is a lot of assumption in your data interpretation here. A lot of the landlords posting may be outside of the upmarket areas you’ve listed above, but tie themselves to it in the advert to attract viewers (do a search for Hurlingham, and you’ll be shocked how big the user-defined area is when you put it on a map!). Additionally, what Eastlands landlord of a KES 15k/month room is going to advertise online? Websites for listing vacant homes are, by their very nature of being posted online (requiring an expensive piece of equipment, English language, and some computer usage skills to access), targeted to upmarket clients. I would venture to say that the vast majority of low- and even middle-income dwellings targeting Kenyans are filled via other means (such as word of mouth, community reference, physical bulletin boards, etc.). I agree with your point that some landlords are pricing themselves out of the market with increased high-end supply, but I don’t think that this data proves the need for market adjustments – it only proves that property websites, by nature, are high-end – and maybe that people likely to use them (English language, higher earnings, etc.) move a lot, creating heavy turnover in high-end supply.

    • April 24, 2014 at 4:50 pm

      I’ve read you comment, and while I agree with most part of it, I beg to differ on the part where you mention that property listing websites are an upmarket-client thing. It is not in order to assume that these factors: (requiring an expensive piece of equipment, English language, and some computer usage skills to access) lock out the low-and middle income properties. What I have actually found out in my research working for a property listing company is that it actually is cheaper to list your property online than to employ the ol’ school tactics such as posting on physical bulletin boards or hiring agents.

      • joh_nnos
        April 29, 2014 at 8:26 am

        On the contrary, lot of the low income houses (KES 15,000 in this case) are available online. An example is the group “who’s moving out I move in” which shows high demand for cheaper units. That for me further validates this exercise.

  4. Carey
    April 24, 2014 at 1:48 pm

    There’s a very simple explanation here which is your sources. You are confusing ‘ online rental adverts’ with ‘actual vacant apartments’ Both OLX and Lamudi allow duplicate listings from the same advertiser, and multiple briefcase agents will advertise the same apartment many times, then the same duplicates will appear on both Lamudi and OLX so double duplication. Secondly, these websites never remove listings – if you go to the last page of rental listings in OLX you’ll find six months plus vintage adverts – none of these apartments are actually for rent. Thirdly, these websites sales teams target the top real estate agents in Lavington, Karen, Runda etc since these are the early adopters of online marketplaces – hence heavy skewing to those areas. Fourthly, on one of the websites there is a very high incidence if fraudulent advertising and naturally the fraudsters target the expensive tenant audience not the cheaper parts if town as that is how conmen work. So there are more vacant non-apartments in Lavington. As anyone in Nairobi knows, there are not acres of vacant lovely homes to rent, quite the opposite, it’s a cut throat competition for the scarce number of good quality rental homes

  5. April 24, 2014 at 4:55 pm

    Very good post I must say. I will agree that the ‘leafy suburbs’ have the highest percentage of vacant houses. Lowering the prices of the house is the best chance for the landlords to get tenants faster and easier. Why let a good house go to waste because of the rush to return your investment in the shortest period ever, I would even say it’s more of greed than need to get returns on your investment.

  6. April 25, 2014 at 2:07 pm

    I don’t think it’s attitude. It’s simple financial ability and also economical thinking. I personally work at Riverside and it takes me 15 minutes to get to work from 87 Kinoo where for a nice large one bedroom house, I pay 13K. Why then would I pay 40k more just to get there 10 minutes faster? And security is not really that big an issue. I have lived in Kinoo for 3 years now, never had a mugging or been robbed. And insecurity is everywhere for muggings in lower class areas trades for hijacking among the upper class. But to each his choice. If you can afford it and feel safer there. Then you can live in the uptown markets. Vacant houses in Kinoo barely last a week before someone snatches it up. It also depends on the fact that the people who are just starting up are way more than the already financially stable ones. Go figure!!

  7. Kojo
    April 26, 2014 at 11:30 am

    Nice article.This is my two cents worth.I agree with you that in an ideal market situation,the forces of demand and supply would generally determine the cost of goods and services.However, the property market in Kenya is not the ideal market economist have in mind when they talk about demand and supply! Instead, it is market dominated majorly by dirty money.Most of the proceeds from corruption,drugs trafficking and piracy is “cleaned” in the Kenyan property market. A good number of the so called investors put their money in the property market to launder the proceeds from these illegal activities,the return on investment is,therefore, the least of their concerns.A drug dealer who has invested in property knows his money is safely hidden in his block of high end apartments with or without tenants. He would therefore see no need to adjust the prices.In any event there is no loan he is servicing!

  8. Maimouna
    April 27, 2014 at 9:51 pm

    I hope the author looks further into mortgage rates + building costs + taxes to show us how much profit the banks are making vis a vis the landlords and the government…I would be very curious to know the answer…

  9. Abdi
    April 29, 2014 at 10:43 pm

    A good piece of analysis. Anxiously waiting for the next post. Good work Mehboob.

  10. mike
    May 4, 2014 at 1:34 am

    The research Topic is interesting and it would be great to understand the supply and demand of real estate… however the research method is poor. All the data gathered simply tells us there are more adverts for property in Westlands than elsewhere. You need hit the streets and gather real data. Otherwise this is just lazy writing…

  11. live in wetlands
    September 6, 2014 at 6:32 pm

    while i agree with many of this feedback i believe that the writer interest was to bring awareness to the property marketing challenges in the upmarket areas. the going rate is overly ridiculous and unaffordable to many kenyans. but i have been attracted to some estates because of good and consistent property maintenance, security, location and access to basic amenities and the size of the property. a lot of consideration is taken in the design of the house and for many years to come the property remains prime. challenges with the newer apartments is that they fail to meet the above criteria especially when it comes to the sizes of the rooms, and i must say there seem to be no measure of standard of what you should expect as minimal requirement

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