Average rent prices dropped across all sectors during first 6 months in 2020
The average rent prices dropped across all sectors during the first six months of the year, according to Cytonn’s half year real estate sector report.
The report indicates that the rent prices for retail, office and residential sectors declined by 7.4%, 7.3% and 5.1% respectively, from 7.7%, 7.8% and 5.2% respectively over the last six months.
In light of the existing COVID-19 pandemic, the real estate sector has taken a hit and continued to face challenges like constrained financing, supply chain constraints, and reduced revenues arising from slow market uptake and downward pressure on prices and rents.
However, the residential sector remained relatively stable even as other sectors were impacted in performance.
Dagoretti, Ridgeways and Westlands recorded the highest annual price appreciation at 3.1%, 3.0% and 1.6%, respectively.
In commercial real estate, Gigiri, Karen and Westlands were the best performing office nodes in the period recording rental yields of 8.9%, 8.3%, and, 8.2%, respectively due to their superior locations and availability of top-quality offices, that enabled them to charge a premium on rental prices.
In the retail sector, Westlands and Karen were the best performing retail nodes with average rental yields of 9.8% and 9.2%.
The report further points to the fact that the land sector recorded an overall appreciation of 1.4%, with asking land prices in low rise residential areas recording the highest annual growth at 3.8%.
The appreciation has mainly been driven by the increased demand for affordable land.
Overall, real estate experts at Cytonn project that the sector’s performance should improve significantly towards the end of 2020 once economic activity regains momentum.