Investors and Landlords in Nairobi are having a hard time in the current real estate business. Builders are concentrating more on putting up office spaces thus a rapid rise in the supply of new offices under low demand in the market. This has led to the rise in competition among landlords. This has therefore forced the building owners to lower rent or keep a constant charge on rent in order to attract new clients and maintain the older occupants.
A report by The Cytonn Investment Company indicates that in 2019 there will be an oversupply in office spaces by 7.6%. This development threatens to dwindle the real estate business in Nairobi.
The report confirms that Thika Road, Mombasa Road and the Central Business District to have a constant demand, high vacancies as well as low prices in terms of rent charges. However, Thika Road and Mombasa Road have been greatly affected by traffic jams and lack of quality offices which makes it unsuitable for occupants.
Whereas Parklands, Kilimani, Westlands and Upper hill are making losses due to many new office buildings being set up under low demand in the market and being rented out at low prices in order to attract new occupants.
Regardless of the bad situation in the real estate business in Nairobi, some areas like Karen and Gigiri are recording good performance. This is contributed by the good infrastructure and high-quality office spaces thus increasing the flow of occupants and clients. This has brought about high profits in terms of rent collection.
The Cytonn Company has encouraged investors to invest in areas with a low supply of office spaces hence high returns. They have also recommended innovative concepts like the serviced offices which boost high returns.