Apartment prices in Nairobi’s suburbs fell in the year to March 2026 as supply of the units exceeded demand, with developers leaning on standalone house sales and rising rental prices to drive their returns on investment.
A periodic housing index report done by real estate firm HassConsult shows that 10 out of the 18 suburbs and satellite towns surveyed reported lower apartment prices in the period, led by Westlands and Upper Hill where prices fell by 7.9 percent and 6.8 percent respectively.
Areas with falling apartment prices included Lavington (-6.4 percent), Ongata Rongai (-5.5 percent) and Ruaka (-5.1 percent).
In contrast, prices of standalone houses rose in 11 out of 14 suburbs, led by Karen and Lavington at 13.2 percent and 12.7 percent respectively.
In the 10 satellite towns surveyed for house prices, eight recorded higher prices, led by Tigoni at 6.3 percent and Ruiru at 6.2 percent.
On average, the price of a property stood at Sh38.7 million by the end of March—with a four- to six-bedroom house averaging Sh45.8 million and a one- to three-bedroom house Sh12.7 million.
“House sale price growth in the suburbs partly stems from undersupply of units and bullish increases in many city suburbs, led by the likes of Lavington and Spring Valley. The correction in apartment prices reflected increased supply, moving to saturation in some areas,” said Sakina Hassanali, the HassConsult co-CEO and creative director.
“In the satellite towns, rising living costs and limited household incomes reduced buyers’ ability to afford homes, leading to price correction in both houses and apartments segments.”
Detached houses account for 8.5 percent of the property market today, compared to 20.4 percent for semi-detached units and 71.1 percent for apartments.
A decade ago, detached units accounted for 32.7 percent of the market, semi-detached units took up 21.9 percent while apartments accounted for 45.4 percent.
The shift in supply and prices indicates that the market has turned in favour of apartment buyers, while signalling challenging times ahead for developers who have put up multiple units in areas such as Westlands, Parklands, Kilimani and Kileleshwa.
These areas were previously characterised by single dweller homes, but changes in the city’s zoning laws and rising land prices have seen developers increasingly move in and put up multi-storey apartment blocks.
In the rental market, prices grew by 4.5 percent in the suburbs and 8.2 percent in the satellite towns in the 12-months to March, indicating that landlords were still able to attract rent paying tenants to apartment units, even as outright purchases stalled.
This was despite the average rent for all property in the suburbs crossing the Sh200,000 mark for the first time within the first quarter to settle at Sh201,832. Average rent in the satellite towns also touched a record high of Sh64,765.
“These prices helped keep rental yields in the suburbs at an unchanged 7.4 percent in the quarter, while the yield in the satellite towns went up from 5.2 percent in December 2025 to 5.3 percent in March 2026,” said Ms Hassanali.
She, however, added that the rise in rental prices raises the possibility that affordability could be nearing a ceiling following several quarters of bullish price growth.
A possible rise in inflation due to the Iran war would also put pressure on household budgets, reducing the ability of tenants to keep meeting higher asking prices by landlords. In the past, periods of economic shock have forced landlords to freeze rental price increments in order to protect the occupancy levels in their properties.
In the year to March, standalone houses in Ridgeways handed landlords the highest annualised price growth at 14.7 percent, ahead of houses in Tigoni at 14.1 percent, apartments in Athi River at 13.6 percent and houses in Kiambu at 13.1 percent.
The rental returns were higher than what the landlords would have earned by investing in government bonds and one-year Treasury bills that were sold in the period, showing that the property sector still has pockets of attractive areas that can compete favourably with the securities.
Government bonds issued in the past few months have been paying investors annual interest at between 11 and 13 percent, while the rates on Treasury bills have fallen to a range of 7.7 and 8.3 percent, from highs of between 15.9 percent and 17 percent in mid-2024.
The decline in returns from government securities has followed 10 successive base rate cuts by the Central Bank of Kenya (CBK) between August 2024 and February 2026, which saw the rate fall from 13 percent to 8.75 percent. The CBK, however, held the rate in its April meeting on concerns about a potential rise in inflation due to the war in Iran.
The only property segments recording a fall in rental prices were apartments in Upper Hill (-5.1 percent), Kileleshwa (-1.5 percent), Westlands (-1.0 percent) and Kitengela (-0.7 percent).
