Why Land Acquisition Has Become Less Attractive for Kenyans

Economic challenges are significantly impacting Kenya's property market, particularly in satellite towns surrounding Nairobi, as indicated by the latest Hass Land Price Index for the fourth quarter of 2024.

The report highlights a marked deceleration in land price growth, which registered a modest increase of only 1.9 percent during this period. This figure is the lowest since June 2023 and represents a sharp decline from the 3.02 percent growth observed in the previous quarter. Historically, land in Kenya has been a preferred investment, driving significant development in more affordable satellite towns.

However, current economic conditions, characterized by job losses and elevated interest rates, have led to reduced purchasing power among potential buyers, notably middle-class families who previously fueled this growth. Sakina Hassanali, Head of Development Consulting and Research at HassConsult notes, “Periods of economic uncertainty can lead to developers delaying land purchases, reducing demand and ultimately impacting prices.”

This trend is particularly pronounced in towns such as Thika and Mlolongo, where land price growth has plummeted from 6.3 percent and 6.6 percent in the third quarter to just 0.9 percent and 1.1 percent, respectively, in the fourth quarter. Nairobi’s suburbs, by contrast, have shown slightly more resilience.

They report a steady growth rate of 1.7 percent, a marginal improvement over the previous quarter's 1.6 percent increase, with areas such as Parklands, Upperhill, Spring Valley, and Kileleshwa seeing price gains exceeding three percent. Overall, of the 14 towns evaluated in the survey, nine experienced a slowdown in price growth, with Kiambu and Ngong recording negative growth.

The once vigorous expansion driven by private and commercial property development in these satellite areas appears to be stalling under the weight of economic pressures. The Hass Land Price Index analysis suggests that the rapid price escalations witnessed during the Kibaki administration—particularly in towns like Thika, Kiserian, Mlolongo, and Syokimau—may have reached their zenith.