Nairobi has been ranked the most expensive city to live in when you are renting out an apartment.
This is based on a recent report by Knight Frank which indicated that the City’s rental charges surged 80 percent on a record high.
According to Knight rank, this puts the city above the rest at 28 percent.
“Despite most stock being built speculatively, absorption rates remain high, driven by the agriculture and FMCG sectors. Unsurprisingly, average occupancy stands at 80 percent. The buoyancy of demand is clearly reflected in the active development pipeline, but also in the performance of rents.”
The rise was a result of high demand in the first moving consumer goods sectors, agriculture, and e-commerce.
There was also a surge in Warehouse development with a total of 170,000 sqm of property having been added in the last five years.
It is a trend which Knight Frank predicts an addition of 400,000 sqm by the year 2024.
“Developers in Kenya have been responsive to growing demand, delivering over 170,000 sqm of speculative prime warehousing over the last five years, prior to which the prime market was confined to a very limited number of developments.”
This report, however, comes two days after another report by property firm Turner and Townsend also showed that out of cities in Africa, Nairobi was the cheapest to build a house.
According to the report, the construction of either offices in Central Business District (CBD), a warehouse, hotel or a mall in Nairobi is Ksh.59,868 per square meter compared to Ksh. 89,913 in Kampala and Ksh.101,332 in Kigali.
However, the construction materials in Nairobi cost higher as concrete, plasterboard and copper cables retailing higher than in the south African city of Johannesburg.
Commenting on the survey, Neill Bulen global Managing Director Turner and Townsend real estate said construction expenditure into new projects is still subdued, leaving a surplus of construction workers competing for fewer projects.
While construction in Nairobi is cheaper, return on investment is lower compared to the other cities. In Nairobi, building costs per square meter of internal area for CBD high-rise offices average at Ksh.101,046.40 compared to Ksh.128,251 for Johannesburg. High-rise apartments, a square meter of internal area costs Ksh.70,732 in Nairobi compared to Ksh.104,266 in Johannesburg.
As of 2021, Kenya ranked sixth largest economy in Africa with a total Gross Domestic Product (GDP) of Ksh.10.1 million, according to Statista.
The largest economy is Nigeria with a Ksh.57.1 trillion GDP.
Egypt is second with Ksh.43.7 trillion GDP. After South Africa (Ksh.36.9 GDP) the third largest economy, two North African countries – Algeria and Morocco follow in the list.
African economies are growing fast. Among the countries with the highest GDP growth rate worldwide, African nations dominate the ranking.