Kenyan property prices have been a subject of huge debate in recently and before we could get into it you will need to understand a few things. Firstly, the monetary cost of land is defined as its value. It could be the cost of undeveloped land with or without a structure. In general, land value in real estate is associated with a vacant plot or piece of land.
Why does the land value differ from the property price?
Prices will vary depending on the country and state you live in due to various factors such as land use, land market, interest rates, circle rate, and overall real estate value of that particular area.
The economic principle of highest and best use of land that produces the highest net return in any term over a period determines land value. This also includes structural attributes, land rates, land use,location as well as other specific characteristics such as accessibility to public service amenities, aesthetics, and so on.
That being said this is how Nairobi compares to Mombasa and other counties in property Values
Most Expensive Apartments for Sale Average Price by County
1. KSh 17,310,000 Nairobi
2. KSh 12,760,000 Mombasa
3. KSh 6,220,000 for Kiambu
4. KSh 5,930,000 for Machakos
County’s Most Expensive Houses for Rent Average Price
1 Nairobi KSh 200,000 per month
2 Mombasa Ksh 75,000 per month
3 Kiambu KSh 70,000 per month
4 Machakos KSh 60,000 per month
4 Kajiado KSh 30,000 per month
While the valuation of land is done with the factors mentioned above in mind, the actual selling price of an area is ultimately determined by the buyer’s paying capacity. All of the above-mentioned factors influencing land value may result in a price that no one is willing to pay.As a result, rather than the evaluated price, the actual amount paid becomes the price.
In retrospect, if you’re in Real Estate to profit, you’ll need to invest in properties that provide both short-term monthly cash flow and the potential for long-term gain, which is why you can’t go wrong with Nairobi.
The table below summarizes the annual income potential from purchasing a single furnished studio apartment in Westlands, for example.
KES5,000,000 ($45,000) for the studio
Yearly rental income (furnished) = KES1,080,000 ($9,500) divided by 12 months.
9,500/45,000 x 100 = 21% rental yield
Capital Appreciation over 3 Years = 5,000,000 x 108% = 5,400,000
5,400,000 x 108% = 5,832,000
5,832,000 x 108% = 6,300,000
If you’re thinking about investing in real estate, you should arm yourself with enough information to carefully weigh your options.