According to Cytonn Real Estate, tenants preferred detached units in Ruiru, Syokimau, Redhill and Kitisuru.
The residential sector H1 2021 report, which showed increased activities supported by governments continued focus on affordable housing through a Sh8.2 billion budgetary allocation, also revealed that top markets for apartments were Waiyaki Way, Parklands and Ruaka.
‘In terms of performance, the sector recorded improved performance with average total returns registering a 0.8% points half-yearly increase to 5.5%, from 4.7% recorded in FY’2020,’ Cytonn report said.
There was a 0.8% depreciation in rental yield in satellite towns, as compared to last quarter, since more people opted to rent than to buy
Specifically, detached units recorded an improvement in performance in H1’2021 compared to Q1’2021 with average total returns registering a 0.6% points q/q increase to 5.4% in H1’2021 from 4.8% recorded in Q1’2021, and a 1.2% points half-yearly increase from 4.2% recorded in FY’2020.
Cytonn observed that, ‘The general improved performance of house prices and rents is attributable increased transactional volumes among buyers after holding on to cash following tough uncertain economic times at the onset of the pandemic”.
Overall, the best performing node was Ruiru with an average total return of 6.6% while Syokimau, Redhill and Kitisuru followed in closely with total returns all averaging at 6.5%. The performance of Ruiru is attributed to the relatively high rental yield of 5.0% compared to the detached market average of 4.2%. Runda recorded the lowest average total returns at 2.1% attributed to a 1.6% price correction.
Performance of apartments recorded improvement with total returns registering a 0.4% points half-yearly increase, coming in at 5.6% in H1’2021 from 5.2% in FY’2020 and a 0.3% points q/q increase from the 5.3% recorded in Q1’2021, with the average price appreciation and rental yield coming in at 0.1% and 5.4%, respectively. Compared to Q1’2021, apartments recorded a 0.2% points q/q increase in rental yields coming in at 5.4% in H1’2021 while price appreciation remained flat at 0.1% in the same period.
Waiyaki Way was the best performing node, registering the highest returns at 8.1% attributable to continued demand evidenced by the relatively high average rental yield which came in at 5.6% and y/y price appreciation at 2.5%. Parklands and Ruaka followed in second and third positions respectively, with average total returns of 7.6% and 7.5%, respectively. The least performing node was Rongai with an average total return of 2.4% attributed to a price correction of 3.9% following reduced demand from buyers forcing sellers to revise their prices downwards.