Tenants of two-bedroom flats have experienced the fastest rise in rent over the past five years with renting costs of three-bedroom maisonette rising at the slowest pace, official data shows.
The Kenya National Bureau of Statistics (KNBS) data puts the average rent of a two-bedroom flat at Sh 19,939 per month in October up from Sh 13,493 in 2010, reflecting a growth of 47.7 per cent.
Three-bedroom maisonette have increased 22.8 per cent to Sh32,605 monthly.
This means developers of two-bedroom units, especially in major towns, have gained the most in terms of rate of returns on their investments.
Sector players attributed the jump in two-bedroom rental prices to rising demand for the units among working middle-income households whose location have proved convenient in daily commute.
“The fact that most two-bedroomed flats are located near or along the routes connecting to commercial districts has proved popular for working class and driven up demand,” said Anthony Mugo, the chief executive of Falcon Development Ltd – a real estate developer.
Mr Mugo said maisonettes are often located in far removed places like Athi River and preferred by rich homes, most middle-income commuters opt for two-bedroom units for convenience and lower costs.
He cited a growing preference for residential units along Nairobi’s Waiyaki Way that connects to Westlands commercial district, teeming with office complexes, malls and top hotels.
The KNBS says rent in the cities — Nairobi, Mombasa and Kisumu — are generally higher due to higher demand and cost of living.
There are concerns of depressed earning since landlords are now required to pay 12 per cent of gross rental income in taxes compared to 30 per cent of profits previously.
Taxing gross rental income means landlords will not deduct costs incurred on wages, repairs, utilities and land rates.
The Kenya Revenue Authority (KRA) will not distinguish between profitable and loss-making property holdings in charging the tax.
The KNBS data shows that the charges for a two-bedroom bungalow have risen 32.5 per cent to Sh 28,052 in the five-year period.
Low-income group focused housing developer Karibu Homes managing director Ravi Kohli said monthly charges for two-bedroom flats match the income budgets of most middle income earners, hence the preference.
Mr Kohli and Mr Mugo said there is a glut in the high-end homes market, including three-bedroom units, citing Nairobi’s Kilimani and Kileleshwa estates where several units have been unoccupied for months.
Courtesy of Business Daily.