Land prices in city’s suburbs up as tough economy hurt prices in satellite towns

Land indices in Nairobi's suburbs outpaced its satellite towns in price growth for the first time in five years, as places like Mlolongo, Ruaka, Kitengela and Rongai overcrowd.

Both property and land prices in towns neighbouring Kenya’s capital city have been on non non-stop hike for the past decade as dwellers escape congestion and noise pollution in city estates.

Improved infrastructure like the Thika Super Highway, Southern Bypass, Western Bypass, Eastern Bypass, Nairobi Express Way and the Standard Gauge Railway also fueled price surge in satellite towns.

According to Hass Consult, tough economic conditions have affected demand for land by the middle class, leading to lower growth in areas such as Kiserian, Kitengela, Ngong, Ongata Rongai, Juja, and Thika.

Hass Land price indices for the second quarter of 2025 for the second quarter of 2025 shows that land price per acre in Nairobi's suburbs rose by 1.6 per cent in the second quarter, slightly slower compared to a growth of 1.7 per cent in quarter one, while the satellite towns saw their prices appreciate by 1.25 per cent, slowing down from a growth of 2.4 per cent seen in the previous period.

All 18 suburbs surveyed in Nairobi returned positive price movement in the quarter. However, Spring Valley (2.3 per cent) and Parklands (2.2 per cent) were the only two suburbs with a price gain of more than two per cent.

An acre piece of land now retails for Sh295.3 million in Spring Valley, having gone up by 2.3 per cent in the past three months and grown twofold in the past 10 years. The prices in the area have increased by 11.5 per cent in the past 12 months.

Land prices have also skyrocketed in Parklands, with an acre now going for Sh463.6 million, 2.2 per cent growth in the past three months and 10.4 per cent in the past decade.

Upper Hill has, however, maintained the crown as the most expensive in the city, with an acre piece of land now going for Sh545.8 million, a quarterly increase of 1.5 per cent and 9.2 per cent growth in the past 12 months.

“The Nairobi suburbs have shown consistency in price movement, allowing them to overtake satellite towns in quarterly price growth for the first time in five years.

Demand for standalone house units also bodes well for land prices in low-density estates, complementing the city's bright apartment development hotspots,” said Sakina Hassanali, Co-CEO & Creative Director at HassConsult.

Nairobi's satellite towns, meanwhile, recorded their slowest expansion in two years, largely due to slower gains of 2.8 per cent in Kiserian compared to five per cent in quarter one, 3.6 per cent in Juja from 4.6 per cent previously and negative 0.2 per cent in Thika from 4.6 per cent in the first quarter.

As economic conditions become tougher for the middle and upper middle class, the previously high demand for land in Nairobi's outlying areas where prices were within reach of private home developers is waning, leading to lower growth in areas such as Kiserian, Kitengela, Ngong, Ongata Rongai, Juja and Thika.

“Developers are also keeping an eye on potential oversupply of apartments in these satellite areas, which has started to manifest in stagnant rental prices and falling sales prices for units in a majority of the towns,” Hassanali said.

In the property market, Hass price indices for the second quarter of 2025 show sales prices in Nairobi grew at their fastest pace in one-and-a-half years on improving demand for standalone units.

Property prices rose by 3.75 per cent in the quarter ending June, compared to a growth of 2.45 per cent in the first quarter of the year.

On an annual basis, property prices rose by 7.8 per cent, compared to 4.9 per cent in the 12 months to March 2025.

The survey found that the detached housing segment, which is made up of townhouses and villas, was the most vibrant in price growth at five per cent, outpacing semi-detached units and apartments, which grew at 1.3 and 1.1 per cent respectively in the quarter.

“Detached house prices grew at their fastest quarterly pace in nine years, which also reflected in suburbs such as Muthaiga, Karen and Runda—that are largely exclusive of apartments— reporting faster property price growth,” Hassanali said.

She opines that the improved annual price growth of 7.8 per cent for all property improved the competitiveness of property against other asset classes such as government Treasury bills, whose interest rates have now fallen to the 8.1 to 9.7 per cent level from 16 per cent a year ago.

In contrast to the sales market, rental prices contracted by a marginal 0.2 per cent in the second quarter compared to an increase of 0.3 per cent in quarter one, highlighting the price-sensitive nature of letting in a tough economic climate characterised by job losses and stagnant pay.

“Landlords are therefore increasingly forced to forego an increase in rent prices to protect occupancy in a price-sensitive market.”

Houses recorded a fall of 1.3 per cent in asking prices, even as rents in apartments rose by 2.4 per cent.

The higher weighted average rental price of Sh224,557 per unit for houses outstrips that of apartments Sh104, 794, meaning that the negative growth for the standalone units pulled down the overall property sector growth.

Houses in Tigoni, Ruiru, Kiserian, Kiambu, Langata, Ongata Rongai, Gigiri and Ridgeways, however, continued to back the market with price gains of over three per cent, while apartments in Upperhill, Kileleshwa and Westlands lagged with declines of between two and 4.6 per cent.