INVESTING IN REAL ESTATE IN WESTLANDS: A JUNE 2021 UPDATE
Westlands is one of the most vibrant and fastest-growing districts in the upmarket area of Nairobi. It is an affluent, mixed-use commercial and residential neighborhood, located approximately 3 Kilometers from the central business district.
During the late 1990s and early 2000s, land at the CBD was becoming scarce and highly-priced. This compelled businesses to relocate to the Westlands and Upper Hill due to the availability of relatively cheaper land. Presently, Westlands is known as a neighborhood housing expatriates, high net-worth individuals, renowned business persons, politicians, and foreigners alike.
Unveiling Westlands: A Prime Investment Destination in Nairobi
The area of focus is well endowed with both infrastructure and amenities such as good roads, hospitals, education institutions, shopping malls, restaurants, and financial institutions.
The key drivers of the real estate sector that have seen Westlands grow and develop tremendously compared to the other upscale market areas are:
- Growth of global corporates seeking to establish regional hubs
- Positioning as a key commercial area
- Urban living
- High returns
- Proximity to the CBD and other upscale market nodes.
A Diverse Market: Residential Apartments, Land, and More
The area is well developed and connected, hence the demand for land is high while the supply is limited. Major roads such as the Uhuru Highway, Nairobi Express Way, Ring Road, and Waiyaki Way service the Westlands area. Great infrastructures such as sewer systems, industrial wastewater disposal systems, developed internal roads, and 24-hour security service make it attractive to local and international developers. The current average cost for an acre of land in the Westlands ranges between Ksh 300 and 420 million.
RESIDENTIAL APARTMENTS
Residential apartments in Westlands are dominated by high-rise apartments ranging from 7 to 43 floors. High-rise apartments have proven to be the most efficient way to utilize the limited land. Units located on the higher floors fetch higher prices as they are considered more luxurious. They offer better ventilation, sunlight, and views.
High Demand, High Returns: The Allure of Westlands Investments
Westlands area has been dominated by 3 and 4 bedrooms from 2010 – 2015. However, as of 2019, the demand for the bigger units has gone down as compared to the studios, 1 bedroom, and 2 bedrooms in Westlands. The average rental yield from the study is 9% for the unfurnished units and 14% for the furnished units in Westlands.
This is because the developments are differentiated by each providing ample amenities. For example, the Elite Residence by VAAL Real Estate has a fully equipped modern gym, steam and sauna, solar-heated swimming pool, concierge services, and conference area. The quality of the interior finishes is also high. Good infrastructure and 24-hour security are also key promoters of the high rental yield in the Westlands area.
Understanding the Market: Rental Yields and Property Prices
The 4 bedrooms which go for 34.2M in Westlands record the lowest rental yield of 8% which is attributed to low demand. Their expected monthly rent for the unfurnished units is Ksh. 220,000 and ksh.280,000 for the furnished units. The 2 bedrooms go for 16.7M with an expected monthly rate of ksh.120,000 for the unfurnished and ksh.170,000 for the furnished units.
The 2 bedrooms have a rental yield of 8.3% and the 3 bedrooms in Westlands 7.1%. The studios in Westlands have the highest rental yield of 12% for the unfurnished and, 22% for the furnished apartments in Westlands. The average price for the studios is 6.5M with a monthly income of ksh.55,000 and ksh.100,000 for the furnished units.
When deciding on the project to settle for, it’s always advisable to choose a project with high-quality finishes and a great location. Quality finishes and a great location will always ensure a higher rental yield. Good infrastructure and 24-hour security are also key promoters of the high rental yield in the Westlands area. There are new developments in Westlands which are still under construction. They include Voltaire, Escada, the Elite Residence, Azelea Heights, Tree Wall, and the GTC.
SERVICED APARTMENTS
Nairobi being a strong business hub in East Africa has led to the growth of supply and demand of serviced apartments in Westlands. Nairobi being a strong business hub in East Africa, has led to the growth of the serviced apartments in Westlands. Some of the serviced apartment brands in the area include Cityblue and the Movenpick in Westlands. The area accounts for 40.3% of the total Nairobi market share. Some of the serviced apartments in Westlands have used international management companies like CityBlue and the Movenpick.
Serviced apartments in Westlands are becoming more attractive to investors due to
- Cost-effectiveness – Unlike hotels, the overheads for serviced apartments are lower, hence cheaper to run.
- High returns – The mix of long- and short-term rentals drives the overall monthly income up
- Easily convertible – to either furnished or unfurnished apartments when the demand for the unit dips
The average monthly rent for serviced apartments for the studios in Westlands is Sh. 120,000 with an estimate of 38 sqm, Sh. 160,000 for the 1 bedroom in Westlands with an estimate of 80 sqm, Sh. 212,000 for the 2 bedrooms in Westlands with an average of 120 sqm and Sh. 250,000 for the 3 bedrooms in Westlands with an estimate of 150 sqm.
CONCLUSION
It is important to note that studios have a higher ROI compared to the 4 bedrooms. For investment purposes, Serviced apartments in Westlands outperform other themes due to higher returns thanks to short-/mid- and long-term rental incomes.
A future outlook shows growth in their demand and supply due to the growth of the area as a regional hub for multinational companies and also preference by local businesses.
A two-year outlook of the residential apartments in Westlands shows that prices are bound to scale higher due to the construction of the GTC, a 43-story project by Avic Developers which will host JW Mariott, 11,592 Sqm of retail space, and 500+ apartments.
