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Single- rooms Fetching High Returns for Developers

Author 2 years ago
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By Moses Adongo

Developers of single room houses have recorded a growth in returns in the last two years compared to those erecting two- bedroom and three- bedroom rentals. This came as average rents for single rooms crossed the Ksh4000 mark in 2016 from Ksh3500 in 2014, representing 12.3% jump according to data from the Kenya National Bureau of Statistics (KNBS).

According to KNBS, single-room rents have recorded the fastest in rising even as the low-income earners struggle to put up with the growing cost of living. On the other hand, three-bedroom rentals recorded the slowest growth in rent, benefiting the tenants while fetching low returns for landlords. The data shows that rents for three- bedroom and two-bedroom units currently stand at an average of Ksh33,123 and Ksh20,080 respectively.

Sector stakeholders predict that low-income housing will grow faster in future compared to high-income housing amid flat demand in the high- end sectors.

“Developers have in the past overlooked the low-end housing market as they focus on high earnings from high-end homes. However, we now have a glut and the market will have to correct itself,” said Ravi Kohli, the managing director of Karibu Homes.

The real estate developer’s director gave examples of Nairobi’s Kilimani and Kileleshwa estates where several three- bedroom houses lie unoccupied for several months.

With the National Treasury mid this year announcing plans to reduce corporate tax for property developers who erect at least 1,000 units every year, sector players predict that this will spur investment in low-end homes market.

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in property price in the last quarter of the year.

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