Why Nyeri’s real estate is booming

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Cytonn Real Estate, the development affiliate of Cytonn Investments, has released the “Nyeri Real Estate Investment Opportunity Report” for 2019, which highlighted that; Nyeri’s real estate market performance improved in terms of investment returns. The average residential rental yield came in at 5.1% in 2019, from 4.1% in 2017, with a slight decline in the commercial sector to 12.1% from 13.5% in 2017, and a growth in capital appreciation of land to 19.1%, from 17.3% recorded in 2017.

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“Our outlook for the performance of the real estate sector in Nyeri is positive, with the investment opportunity being mainly in the land sector in site and service schemes, which recorded a relatively high capital appreciation of 19.1% per annum, and in the commercial sector given the relatively high yields of 12.1% per annum and the existing market gap for quality commercial buildings, ‘’ said Johnson Denge, the Senior Manager for Regional Markets at Cytonn Real Estate.

According to the report, the real estate market in Nyeri is expected to continue recording improved performance, supported by; i) devolution,which has continued to open up Nyeri town, attracting government institutions, private investors, thus creating demand for office space, retail space and residential units, ii) hosting of Mt. Kenya Regional Headquarters as it is centrally located, thus creating demand for office space, retail facilities and housing units, iii) a relatively high income, with Nyeri being ranked the 12^th richest county in terms of GDP per capita in the country, at USD 958.0, which illustrates a high purchasing power thus a growing demand for property in Nyeri, iv) tourism, boosted by key attractions including national parks and Lady Baden Powell graves, resulting in demand for hospitality services, v) the growth of small and medium enterprises, boosted by the ease of doing business and vi) the improving infrastructure, which is expected to open up areas for development.

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The residential sector in Nyeri recorded improved performance with an average rental yield of 5.1%, compared to the 4.1% recorded in 2017, attributed to an increase in demand, with the occupancies growing by 8.0% points from 82% in 2017, to 90% in 2019 in addition to an increase in rent prices. Residential properties are mostly for rent, with the National Housing Corporation, probably being the only developer who has adopted the build for sale model.

In the commercial sector, there has been increasing supply of space with one of the most recent completions being the County Mall which was opened in 2018, bringing to the market 65,000 square feet of mixed-use space. In terms of performance, the sector recorded an average rental yield of 12.1%, from 13.5% in 2017, attributed to the decline in occupancy rates from the 89% recorded in 2017 to 87% in 2019, resulting from the growing supply of space in the market. “Despite the slight decline in performance, Nyeri continues to outperform other markets such as Mombasa, Kisumu, Nairobi and Nakuru with a yield of 6.7%, 9.2%, 8.3% and 6.5%, respectively. This indicates that, in comparison to the other 4 regions, Nyeri offers a better investment opportunity for commercial property, attributed to low supply of quality office spaces in the market,” stated Beatrice Mwangi, a Research Analyst at Cytonn.

According to the report the land sector recorded a relatively high capital appreciation of 19.1% compared to the 17.3% recorded in 2017, attributed to increased demand for plots in site and service schemes as prospective homebuyers prefer to buy land and build their own houses.