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Landlords hit harder as rent falls in
suburbs bordering Kenya’s capital

NAIROBI (Xinhua) -- The dozens of suburbs bordering Nairobi, Kenya’s capital, have experienced rapid real estate development in the last a few years, but this growth is now hurting property developers as rental yields fall.

The towns that include Rongai, Kitengela, Ruaka, Zambezi, Athi River, Mlolongo, Juja and Kiambu have come to be known as “Nairobi’s bedroom” because many people who work in the capital live there after relocating in search of low rent and serenity.

Over the years, population in all the suburbs has surged, becoming an impetus for developers to invest in high-rise residential buildings to reap big.

Some of the buildings go as high as seven floors, hosting up to 50 two-and-three-bedroom units.

These structures have now become a major undoing for the landlords as rents for two and three bedrooms fall in some suburbs and in others stagnate.

Kitengela is one of the suburbs where rents for the houses have declined as landlords try to lure tenants.

A three-bedroom unit in the suburb is currently being rented out for as low as 200 U.S. dollars a month down from at least 250 dollars, thanks to the saturation of houses.

On the other hand, two-bedroom units in the suburb are going from as low as 120 dollars to 150 dollars, down from an average of 180 dollars a year ago.

“There are so many houses around that it has become difficult to raise the rent,” Samson Muigai, a housing agent in Kitengela, said Thursday. He noted that developers have built so many houses that it has become a tenants’ market.

“Tenants are spoilt for choice and in some instances are dictating what they want to pay, you have no choice but to agree,” he said.

“I have seven three-and-two-bedroom units in various apartments that the owners are charging 250 dollars to 200 dollars respectively as rent. Eight months later they are yet to get tenants despite numerous enquiries,” he added.

In Ruai and Athi River, and the other suburbs, the same scenario replicates with some landlords reducing rent while others offering incentives like free garbage collection to lure tenants.

“I had to cut rent from 140 dollars to 125 dollars to maintain my tenants but still two of the six two-bedroom houses remain vacant after the previous occupants relocated to a new apartment offering same rates,” said John Kuta, a banker and landlord in Ruai.

Kuta noted he built his two-storey block of rental units some five years ago, and then, the number of houses being constructed were not many, but in the last two years, a lot has changed as developers go for high rise buildings.

“I have seen Ruai being turned into high-rise residential estate, with many developers coming in but the market is now saturated and we are feeling the pinch,” he said.

The development has hit also owners of bungalows and maisonettes harder, as people shun the houses due to high rent. Also affected are housing agents whose income has declined or in some cases dried up due to low demand.

A bungalow in estates like Mlolongo and Rongai go for at least 300 dollars a month while four-bedroom maisonettes are being rented out for at least 400 dollars.

Interestingly, small house owners mostly who have two rooms and one-room houses are not feeling the pinch as rent at the level rises.

Rent at the segment has accelerated faster in the last one-year, according to the Kenya National Bureau of Statistics, as demand outpaces supply at the level mainly due to developers shunning building the houses.

A single room goes at an average of 50 U.S. dollars, but charges range from 40 dollars to 70 dollars, depending on the residential areas.

“Developers made the dirty bed themselves, therefore, they must lie on it,” said Antony Kuyo, a consultant with Avent Properties in Nairobi, in reference to the low rent.

“They have concentrated on building two-and-three-bedroom houses in search of higher rent but this is now working against them,” he said.

He noted that thanks to the saturation of houses due to the many apartments, the rental market is now correcting itself as some landlords were charging higher rents that have placed them out of the market.

           

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