Land prices in Karen and Langata grew at the fastest pace among Nairobi’s suburbs and satellite towns in the year to June after a change in policy allowed construction of high-rise buildings in sections of the estate.
HassConsult, a real estate firm that tracks rents and property prices, says the cost of an acre in Karen rose 10 percent to Sh79.5 million in the period to June while Langata recorded a 9.8 percent growth to Sh94.7 million.
The consultancy linked the surge to the recently published Nairobi City County Development Control Policy 2026, which changed the zoning rules allowing for high density dwellings.
It allowed for four storeyed buildings along the Karen Triangle – the intersection of Ngong Road, Karen Road and Langata Road – and also along Langata South Road, Magadi Road and Bogani East road.
Previously, developers could only do single dwellings with a ground cover of 25 percent, which has now been increased to 50 percent.
The change in rules triggered demand for land from developers seeking to build and rent homes, targeting the middle class.
“Karen and Langata recorded their strongest quarterly price growth in a decade as demand increasingly shifted towards suburbs offering relatively lower land acquisition costs for both residential developers and individuals building their own homes” said Sakina Hassanali, the HassConsult co-CEO & Creative Director.
“Prices rose as the Nairobi County government published an updated property development policy, removing some of the uncertainties around approvals that were hurting demand for land for new developments as developers adopted a wait and see approach to new projects” she added.
The policy allowed for densification of plots close to the road in the two neighbouring suburbs.
The inner plots of Karen however remained capped at two storey single dwellings. Some of those that remain as single dwellings include Hardy, Kuwinda, Karen C, Miotoni and Park Place area.
“Planning policy increases or reduces prices in an area depending on whether development is relaxed or constrained,” said Johnson Ndenge, a real estate consultant. “For instance part of Karen and Langata where they allowed for densification, especially around the roads – meaning that people were allowed to go higher, the potential for optimizing such a land goes higher and naturally then prices go up,” he added.
The high-density window allows investors to maximize returns from the plots in what analysts reckon has upped demand for land in sections of the two estates.
Nairobi County had not revised its development policy for over ten years resulting in ambiguity in zoning rules which had pushed out some potential investors.
“In the absence of a revised policy, development control decisions have largely been based on discretion, precedent, and planning justifications advanced by developers, architects and engineers,” said the County government.
Nairobi County says the revised building rules will be implemented in collaboration with resident associations. The policy gives recognition to neighbourhood associations, so that they are not just informal groupings.
Nairobi suburbs recorded an average 4.2 percent price growth in the year to June, marking Karen and Langata among outliers.
Some of the other suburbs whose land values grew include Runda up 8.9 percent to average Sh105.6 million, Nyari 8.8 percent (Sh128.2 million) and Riverside 7.7 percent (Sh382.3 million).
Muthangari and Muthaiga saw their values decline 4.9 percent and 1.9 percent being the only suburbs to register price drops.
Land prices in the suburbs outperformed those in Nairobi’s satellite areas whose values rose by an average 2.95 percent compared to the 4.2 percent by the suburbs.
Seven of the 14 satellite towns, whose land values have been tracked by HassConsult for over 18 years, recorded negative growth, led by Ngong down 2.5 percent and Limuru at 0.8 percent.
Other towns whose land prices recorded a decline in the quarter include Athi River, Kiambu, Kitengela, Syokimau and Tigoni.
The decline in land prices has been attributed to rise in cost of living squeezing the disposable income of middle class homes who are ideal to purchase properties in the satellite towns.
Ruiru led the satellite towns whose property prices rose with a quarterly appreciation of 4.1 percent to Sh42.2 million per acre, followed by Thika at 3.8 percent to Sh32.4 million, and Ruaka at 2.8 percent to Sh115.7 million per acre.
Ruiru’s land prices were driven by its proximity to large mixed-use developments such as Tatu City and Northlands, which have pulled in workers for industrial and commercial installations, thus providing demand for housing that is boosting the property market. Thika’s imminent elevation to city status is also contributing to the higher price of land in the area as it prepares for the increased investment that comes with the status.
