Beyond the City Limits: Why Smart Investors are Looking to Nairobi’s Satellite Towns

Beyond the City Limits: Why Smart Investors are Looking to Nairobi’s Satellite Towns

Welcome to Nairobi, the city adorned with shiny skyscrapers, sprawling malls, and interconnecting highways. While acknowledging the contradictory flipside to this picturesque scene, today, we choose to focus solely on good tidings. Negative energy is unwelcome here, ha-ha.

Seriously though, whilst not perfect utopia, City of Nairobi has been undergoing a gradual but steady metamorphosis. For those of the diaspora community reading this, who may have travelled abroad ten to twenty years ago, the progress we’ve made despite governance challenges is most likely to surprise you.

Indeed, good things are happening amidst the stream of the negative news that you see around. Real estate has long been a go-to investment opportunity for Kenyans, attracting both small-scale investors who purchase plots in growth areas for resale at the right time and ambitious developers who conceptualize and build large-scale master-planned communities with hundreds of housing units.

The real estate journey has been both trying and fascinating for all players in the value chain, from developers to buyers. Recognising the relatively higher returns in this asset class, more individuals are throwing their hats into the field. The increased activity in real estate has pushed what I would term Nairobi’s core to its limits, if not breached them. Here, I’m referring to the cherished hot addresses or most sought after real estate nodes like Kilimani, Lavington,Kileleshwa, and Westlands which were once considered the gold standard of city life.

Taking a stroll in these estates now often reveals ongoing construction of high-rise apartments, reflecting the intense development that has caused discomfort among long-term residents accustomed to spacious surroundings.

Of all the Nairobi neck of the woods, Kilimani and Kileleshwa, in particular, have borne the brunt of this transformation. On social media, people make jokes and liken them to ‘upgraded Pipeline’, a popular estate in Eastlands of Nairobi. It is largely considered less affluent and known for its densely packed high-rise apartments, often lacking elevators, parking, and natural lights. Seemingly, once an organized middle-income neighbourhood is morphing into something else, something that most old money don’t like.

As a result, those who value their privacy, serenity and space are moving in droves to satellite towns, leaving behind the new money, wallowing in the chaos that is now Kilimani and Kileleshwa. A few are also looking for refuge in estates like Karen, Runda, Spring Valley, Loresho, Muthaiga, and Kitusuru which are still clinging onto their endowed prestige and aristocracy, courtesy of their powerful and influential tenants who are unwilling to repeal zoning laws.

In view of the developments happening at Nairobi’s core, smart real estate investors are now looking for opportunities in satellite towns where those who dislike commotion are migrating to. And in case you are in doubt and think this is ‘jaba stories’ just look at the latest land prices.

Land prices in Nairobi’s satellite are rising. According to Hass Land Index Quarter Four of 2023, Ngong appreciated by 21.4% to Ksh35 million per acre; Thika by 17.8% to Ksh27.2 million per acre; Syokimau, 15.8% to Ksh32.7 million per acre; Athi River, 10.6% to Ksh18.7 million per acre; Kitengela, 10.5% increase to Ksh16.1 million per acre, Mlolongo, 10.9% increase. Ruiru 8.7% to Ksh30.7 million per acre and lastly, Kiambu 8.1% to Ksh47.3 million per acre.

While the land value is going up, the government has also been busy upgrading infrastructure in satellite town either out of anticipation of population growth or simply doing smart physical urban planning expected of a discerning government. Take Western Bypass, for example. This massive highway project by Kenya National Highway Authority (KenHa) is a game-changer as it will enhance access and vehicular capacity across the region. And it’s not just roads – there’s a whole lot more going on! We have the planned Nairobi Railway City, the Northern Tunnel Collector, even a spanking new sewage system for Kiambu Ruaka among others.

So, whichever way look at it, change is here. It is happening. But the real goldmine lies beyond these established havens. For savvy investors, now is the time to pivot and explore opportunities in satellite towns within the Nairobi Metropolitan area, not only in real estate but also in other sectors with promising returns. Wishing you smart investing endeavours!

Authors Note: The views expressed herein belong to the author and do not necessarily reflect those of the developer.

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