Skip to main content
Part of complete coverage on

Lavish and sleek: Kenya's prime property market boom

From David McKenzie and Teo Kermeliotis, CNN
updated 11:03 AM EDT, Thu June 28, 2012
Houses in Miotoni Ridge, a 14-mansion development in Nairobi, Kenya, are designed for the highest-end of the luxury market. Houses in Miotoni Ridge, a 14-mansion development in Nairobi, Kenya, are designed for the highest-end of the luxury market.
Kenya's luxury real estate
Kenya's luxury real estate
Kenya's luxury real estate
Kenya's luxury real estate
  • Kenya's prime housing market saw the biggest price increase globally last year, a report has found
  • The country's market offers top returns to investors, estate agents say
  • But international buyers have been slow to dive into the market, partly due to security reasons
  • Analysts say uncertainty about elections and high interest rates may also hamper growth

Nairobi, Kenya (CNN) -- Inside a gated community in a tranquil Kenyan suburb, a group of builders are putting the final touches to the exterior of a lavish, red-tiled villa nestled in the middle of a landscape garden.

Within the spacious property, no luxury is spared: Hardwood floors, Venetian finishes, designer furniture and five en-suite bathrooms ensure that all the modern conveniences are in place for the future tenants.

Welcome to Miotoni Ridge, a 14-mansion development in one of the Kenyan capital's most prestigious locations.

Houses here are designed for the highest-end of the luxury market. Asking prices are running at more than $1 million but that has not deterred any potential buyers: 60% of these properties are already sold out.

Kenya's luxury housing boom

In fact, a study earlier this year by estate agents Knight Frank and Citi Private Wealth found that Nairobi was the best performing prime residential market in the world.

Values in the city grew up by 25% in 2011, leaving luxury hotspots such as London, Miami and Hong Kong behind.

Read more: Africans shun crisis-hit West for jobs back home

Ben Woodhams, managing director of Knight Frank Kenya, says the findings of the survey surprised even the agency's research department.

"We were higher than Miami and it was like 'how dare you,'" he says. "So we had to justify our figures and say 'yes, this really is what is happening here.' But it is about growth, it is not about value."

Although this growth comes from a base of relatively low prices, Woodhams says there's a number of factors that has made investing in Kenya's luxury housing market attractive.

"Regionally Kenya is a safe haven," he says. "People are seeing relatively good returns in Kenya specifically, but [also] in Africa as a whole -- particularly with the problems we are seeing in the rest of the world."

While the old town has changed a little bit in the last five years, it hasn't changed much in the last 500 years.
Andrew McGhie, estate agent, Lamu

Woodhams says it's mostly Kenyan or Kenyan-linked investors that drove the country's prime housing market to the top spot.

"A lot of Kenyans in the diaspora in the [United] States and Europe send a lot of money back to Kenya and a lot of that gets invested in the property market," he says. "So that is another big driver for us."

Yet, Nairobi is not the only location in Kenya experiencing great growth in luxury real estate.

Coastal hotspots such as Mombasa, Malindi and Lamu occupied the second spot in The Wealth Report 2012, recording a 20% price growth in luxury residential properties.

Lamu, a tiny island located off Kenya's north coast, is the second home for many tycoons, attracting local and international investors who flock in to get a unique combination of sun and culture.

Andrew McGhie, a Lamu-based estate agent, says that Kenya's coast tugs at people's heart strings, not just their wallets.

"Lamu attracts a fairly adventurous romantic type person who wants to come to somewhere that is completely different to their everyday lives," he says.

"While the old town has changed a little bit in the last five years, it hasn't changed much in the last 500 years."

Read more: Using the web to fight corruption

Although Kenya's prime real estate might be booming, analysts say that international investors have been slow to dive into the country's market, partly due to security reasons.

Lawlessness in neighboring Somalia recently spilled over the border while kidnappings of tourists in the area prompted several countries to put out travel warnings.

Kenyan forces have moved to occupy southern Somalia and beefed up security on the coast. The warnings were lifted but the chilling effect remains.

The levels of growth we have seen in Kenya have made the returns for corporate institutional investors very good indeed.
Ben Woodhams, Knight Frank Kenya

"International investors are keen in getting into countries where they know that their property rights are protected. Where the rule of law is respected," says James Muratha, regional director at Stanbic Investments.

"And where there is a perception where the justice system is not up to par, then they prefer to stay away. And that is why you see more local investors investing in these markets as opposed to international investors," he adds.

Analysts also say that uncertainty about upcoming elections and high interest rates may also hamper growth in the market.

But agents believe it will only be temporary.

Woodhams says the country's market can offer top returns to individual and institutional investors.

"It is not just because of the direct relationship between rent and capital value," he says. "We are talking about year on year growth as well and I think that's the key.

"The levels of growth we have seen in Kenya have made the returns for corporate institutional investors very good indeed."

Ultimately, they hope the deals will just be too good to miss.

Part of complete coverage on
Marketplace Africa
updated 6:00 AM EST, Fri November 21, 2014
Fish from the tiny mountain kingdom of Lesotho are served in top Tokyo sushi spots.
updated 8:23 AM EST, Tue November 18, 2014
The world-famous waterfall is inspiring a local tourism boom as an increasing number of people is visiting Zimbabwe.
updated 5:07 AM EST, Tue November 11, 2014
Seychelles needed more than pristine beaches and choral reefs to boost its once troubled tourism industry.
updated 6:26 AM EDT, Wed October 22, 2014
A general view of the Hout Bay harbour covered in mist is seen on May 8, 2010 from the Chapman's peak road on the outskirts of Cape Town. Chapman's peak road is the coastal link between Cape Town and the Cape of Good Hope. When following the African coastline from the equator the Cape of Good Hope marks the psychologically important point where one begins to travel more eastward than southward, thus the first rounding of the cape in 1488 by Portuguese explorer Bartolomeu Dias was a major milestone in the attempts by the Portuguese to establish direct trade relations with the Far East. He called the cape Cabo Tormentoso. As one of the great capes of the South Atlantic Ocean, the Cape of Good Hope has been of special significance to sailors for many years and is widely referred to by them simply as 'the Cape'. It is a major milestone on the clipper route followed by clipper ships to the Far East and Australia, and still followed by several offshore yacht races. AFP PHOTO/GIANLUIGI GUERCIA (Photo credit should read GIANLUIGI GUERCIA/AFP/Getty Images)
Abandoned workshops and empty warehouses are getting a new lease of life in Cape Town.
updated 6:37 AM EDT, Wed October 15, 2014
Inside a glove factory on the outskirts of Addis Ababa, busy laborers turn patches of leather into these fashionable garments.
updated 6:50 AM EDT, Thu October 9, 2014
The Somali capital now has its first-ever ATM bank machine -- and it dispenses U.S. dollars.
updated 5:11 AM EDT, Thu October 9, 2014
Waves lap at the ships as they pull into the Port of Ngqura, but no swell is stopping the local economy booming.
updated 11:24 AM EDT, Fri October 3, 2014
In Uganda, a group of landmine victims are using banana fiber to create rope, profit and community.
updated 9:37 AM EDT, Thu September 25, 2014
What does it mean to be Nigerian? That's the question on the lips of many in Nigeria as new national identity cards are being rolled out.
updated 7:05 AM EDT, Thu September 18, 2014
 General view of an oil offshore platform owned by Total Fina Elf in the surroundings waters of the Angolan coast 15 October 2003. The 11 members of the OPEC oil cartel have agreed to slash output by a million barrels a day, the OPEC president said 11 October 2006, in a move aimed at shoring up sliding world crude prices.
Six of the top 10 global oil and gas discoveries last year were made in Africa -- but can these finds transform the continent?
updated 6:21 AM EST, Thu February 20, 2014
A South African app allows buyers to pay for goods using their phone, without having to worry about carrying cash or credit cards.
updated 7:27 PM EST, Thu December 12, 2013
African astronomers want world-class observatories to inspire young scientists and build a tech economy.
updated 10:23 AM EST, Wed February 19, 2014
A Zambian computer tablet -- known as the ZEduPad -- is trying to open up the country's information highway.
updated 5:57 AM EST, Thu January 9, 2014
South Africa may be the dominant force in Africa's wine economy, but other countries are making inroads in the industry.
updated 5:27 AM EDT, Thu October 10, 2013
Eko Atlantic city design concept
A lack of infrastructure has hindered Africa's development, but a series of megaprojects could change that.
Each week Marketplace Africa covers the continent's macro trends and interviews a major player from the region's business community.