A new report by the Cytonn Investments Management Limited has revealed that Kilimani, Westlands and Thindigua are the three most profitable estates to put up apartments.
According to the report, good infrastructure and easy access to business nodes have made the areas more friendly to tenants, to the benefit of developers.
The Cytonn Nairobi Metropolitan Area Residential Report outlined that apartments recorded returns at an average 8.7 percent p.a, 0.5 percent points higher compared to the overall residential market average of 8.2.
The report indicated that the general annual returns from real estate decreased marginally in 2017 from 9.4 to 8.2 percent.
The drop was attributed to the prolonged election season that hit the economy towards the end of the year.
In addition, Cytonn noted that developers were deterred by reduced lending from banks as they protested the imposed interest rate cap.
Karen, Runda Mumwe and Ruiru emerged as the ideal areas for developers intending to deal in detached housing units.
Developers got an average total return of 7.6 percent p.a during the period polled, which is 0.6 percent points lower compared to the market average of 8.2 percent.
Ruiru, however, recorded the highest percentage in returns at 11.7 percent out of the four high-return estates.
Upper Kabete, Ruaka and South B/C also recorded double-digit returns for landlords and developers due to the good infrastructure, and accessible locations in relation to places where most people work, such as the Nairobi CBD, Upperhill and Westlands.
