Report: Why More Rich Kenyans Want Affordable Luxury Homes

The second half of 2024 saw more of Kenya's High Net-Worth Individuals (HNWI) eye prime properties that include luxury homes at a reasonable price to keep up with the pressures of an ailing economy in the country.

This demand for reasonably priced prime properties could explain why the residential market saw increased demand, with sale prices rising 8.27 percent year-on-year, up from 2.45 percent in 2023, according to Knight Frank's Kenya Market Update report covering the second half of 2024.

"Prime residential sales index increased by 8.27% for the 12 months to December 2024 compared to 2.45% in a similar period in 2023. Similarly, prime residential rental indices increased by 6.56 % for the 12 months to December 2024 compared to 5.85% in a similar period in 2023," read the report in part.

"There has been increased demand for reasonably priced prime properties from high-net-worth individuals and the expatriate market."

Explaining this, Knight Frank partly attributed the increased demand to the scarcity of those properties as developers shifted focus to developments that target low and middle-income residential consumers.

To partly address this market demand, Knight Frank Africa launched its premier continental collection that consists of prime residential properties across the continent.

Furthermore, the growing middle class in Kenya’s capital has driven increased demand for quality housing, as evidenced by county government data showing that residential buildings accounted for 83.35 percent of the value of building plans approved in the first three quarters of 2024.

"This rising demand has prompted changes in zoning regulations, transforming areas like Kilimani from single-storey zones into skylines of residential towers. However, affluent neighbourhoods such as Karen, Muthaiga, and Kitisuru have retained their low-density, single-storey character, reflecting their status as homes to the wealthy," added the report.

The real estate firm cited a notable trend in the residential market being the “build-to-sell” concept, which caters to middle-income earners aspiring to own homes. This means that developers are offering opportunities to purchase apartments in Nairobi suburbs such as Westlands, Runda, Lower Kabete, and Kiambu Road.

The report noted that the model often results in partitioned properties where owners pay only service charges. However, managing these properties effectively remains a challenge due to the involvement of multiple owners, often numbering in the tens or hundreds.

Like other real estate sub-sectors, the residential market has been affected by Kenya’s tough economic climate. Rising interest rates have increased construction costs, pushing up property prices and discouraging buyers already burdened by economic pressures. 

"To counter this, developers are promoting off-plan investments as a cost-effective option. However, this approach has received mixed reactions, as cases of unscrupulous developers have led to significant financial losses for some buyers, further dampening market activity," added the report.

A photo of the Kilimani skyline. /STAY PLUS