Kenya Real Estate Market Outlook 2025

DELCARE
May 10
13 min read

This report, prepared by Delcare Properties International’s lead researcher Diana Mambore, reviews Kenya’s 2024 real estate trends and presents forecasts for 2025. It draws on official and industry sources (KNBS, World Bank, HassConsult, Cytonn, Knight Frank, etc.) to cover all key segments – residential, commercial, luxury, industrial, affordable housing, and land – at the national and regional level (Nairobi, Mombasa, Kisumu, Nakuru, Kiambu). The tone is professional and data-driven, reflecting Delcare’s leadership in Kenya’s luxury and broader real estate markets.

Macroeconomic and Policy Context

Kenya’s economy rebounded modestly in 2024. GDP growth is estimated around 4–5%, up from slower 2023 performance. Fitch Ratings projects 5.1% GDP growth in 2025 (versus ~4.6% in 2024)dmarketforces.com as private-sector activity recovers. Inflation, which surged above target mid-decade, eased back to ~4–5% by late 2024dmarketforces.com. The Central Bank of Kenya (CBK) cut its benchmark rate repeatedly, ending 2024 at 11.25%reuters.com. With inflation stabilizing and the Kenyan shilling strengthening, further rate cuts are possible in 2025 dmarketforces.comdmarketforces.com.

Despite growth prospects, Kenya faces fiscal pressures. High debt service costs are crowding out development spending, and social unrest (in late 2024) underscores ongoing risks content.knightfrank.comdmarketforces.com. The government remains committed to housing sector support. Kenya’s affordable housing programs (part of the “Big 4” agenda and the new Affordable Housing Act) target 200,000 new units per yearkenyanews.go.ke. The Kenya Mortgage Refinance Company (KMRC) is fostering lower-cost home loans – as of 2024 it had refinanced ~3,300 mortgage loans to banks cytonnreport.com, though the housing deficit still runs around 200,000 units annually kenyanews.go.kecytonnreport.com. Tax incentives for developers and streamlined land tools (e.g. the National Land Information System) are intended to improve supply, especially in affordable housing and mixed-use projects.

Infrastructure investment remains a priority. Major projects – new highways (e.g. the planned USHUSI Expressway linking Nairobi–Mombasahighways.today, Nairobi’s road bypasses, and significant port and rail expansions) – are underway. A 2024 budget raised infrastructure spending by 8% (to KSh 505.7 bn)cytonn.com. However, some development budgets (roads, housing) were cut in FY2023/24 due to fiscal constraints cytonn.com. In the Nairobi Metro, ongoing mass-transit planning (SGR extensions, commuter rail) and urban renewal projects (e.g. Regeneration of CBD towers) will shape demand. Overall, Kenya’s 2024 macro stance and policy mix should support moderate real estate demand: inflation falling into target and interest rates easing bolster affordability, while large infrastructure projects open new areas for growth.

2024 Market Performance

Nationally, the real estate sector remained active in 2024 despite high borrowing costs. According to the Kenya National Bureau of Statistics (KNBS), 76.2% of listed residential properties sold in 2023knbs.or.ke, reflecting strong demand for most house types (especially 2‑ and 4‑bedroom homes). Absorption was much slower for apartments (average off-take time ~16 months)knbs.or.ke. In the rental market, flats and apartments dominated the stock (77.1%)knbs.or.ke, and 88.8% of available rentals were leased in 2023 knbs.or.ke, indicating healthy demand across urban counties (top centers were Nairobi, Kiambu, and Kajiado). Rental yields varied widely: KNBS found two-bedroom townhouses yielding up to 8.3% annually, while small studios returned ~2.2%knbs.or.ke.

Home prices in 2024 climbed modestly. In Nairobi’s suburbs and satellite towns, sales prices grew 5.2% year-on-year in 2024newstrends.co.ke mwakilishi.com, roughly doubling the 2.5% growth seen in 2023. Detached houses led the gains (+7.5% annual, +1.5% in Q4 alone)newstrends.co.ke, as their supply remained tight. In contrast, semi-detached units and apartments saw only marginal price growth in 2024 (annual +0.8% and +1.6%, respectively newstrends.co.ke). Ask-rents were essentially flat in 2024 (virtually 0% change year-on-year)newstrends.co.ke; a small rebound (+0.2%) in Q4 rental levels coincided with easing inflation newstrends.co.ke. Notably, high-end suburban locations and satellite towns saw stronger increases: Juja and Ridgeways posted double-digit gains (~11–13% annually)newstrends.co.ke.

Formal indices support this trend. Knight Frank’s prime residential index rose 8.3% in 2024 (annual), well above the 2.5% gain in 2023 content.knightfrank.com. Prime rental indexes also ticked higher (+6.6% in 2024 vs +5.9% in 2023)content.knightfrank.com. Developers report shifting focus toward middle-income build-to-sell projects (e.g. off-plan apartment blocks in Westlands, Runda, Juja) to meet demand content.knightfrank.com. Cost pressures have strained home-buyers, however: rising interest rates have lifted construction costs and pushed up prices, which has discouraged some buyers content.knightfrank.com. As a result, sellers are increasingly offering off-plan discounts to stimulate sales, though this carries developer risk.

In the commercial sector, office space continued to feel the weight of oversupply. In Nairobi, new Grade A offices completed in 2024 (Purple Tower, Highway Heights, Matrix One, etc.) added over 522,000 sq.ft of prime stock content.knightfrank.com. Given tepid demand, average office occupancy in the metropolitan area fell from ~77% in early 2024 to 72.7% in H2 2024content.knightfrank.com. Prime office rents held steady at about US$1.20 per sq.ft per month content.knightfrank.comcontent.knightfrank.com, but landlords increasingly face tenant resistance on currency terms (many tenants avoid USD leases)content.knightfrank.com. High vacancies and strong competition have softened rental and capital values in office towers. In contrast, retail has remained relatively healthy. Roughly 250,000 sq.ft of new retail space opened in 2024 (notably GTC Mall Westlands, Nord Mall in Ruiru, Runda Mall)content.knightfrank.com, yet prime malls report >90% occupancy at rents of ~KSh 600/sq.ftcontent.knightfrank.com. Supermarkets and fast fashion anchors (e.g. Carrefour, Decathlon) expanded aggressively (Decathlon opened a 64,500 sq.ft flagship in Westgate content.knightfrank.com), tapping a growing middle-class consumer base. Malls in affluent neighborhoods continue to perform best, while informal and high-density areas remain underserved.

The luxury and hospitality segment saw solid demand in 2024. HassConsult data show that premium Nairobi apartment prices are much lower than global peers (e.g. ~KSh 26–28m for a 200 sqm high-end flatmwakilishi.com, versus >KSh 100m in London/New York) and offer rents yields ~7–9% (versus 3–5% abroad)mwakilishi.com. This yield advantage, plus Kenya’s relatively low cost of living, has attracted foreign and diaspora buyersmwakilishi.com. Tourism rebounded strongly: Knight Frank projects about 2.5 million tourist arrivals in 2024 content.knightfrank.com (a record high) and more than 1,350 new hotel rooms opened during the year content.knightfrank.com (including luxury projects in Nairobi and the coast). High-end residential enclaves (Karen, Lavington, Muthaiga) maintained buoyant values, driven by wealthy locals and expatriates.

On the industrial front, Kenya’s manufacturing and logistics sectors showed resilience. Though Kenya remains relatively unindustrialized with high production costs content.knightfrank.com, several industrial parks and SEZ projects gained momentum. Notably, the Nairobi Gate SEZ (a public–private park) commenced a 5th phase adding 130,000 sq.ft of modular warehouses content.knightfrank.com, attracting tenants with tax incentives. Investors are deploying capital into factories and warehouses: examples include Kim-Fay (tissue manufacturer) breaking ground on a KSh 2.5 bn plant, and Mombasa Cement planning a 20 MW captive power plant content.knightfrank.comcontent.knightfrank.com. Government-backed SEZ initiatives (e.g. Dongo Kundu in Mombasa, Vipingo on the coast) are slowly taking shape. E‑commerce growth is also pushing demand for logistics space. However, overall industrial space supply remains limited outside Nairobi (Nairobi Gate and Tatu City are the largest facilities).

By the end of 2024, land values reflected urban pressure. Within Nairobi’s metro area, KNBS found that development land in core Nairobi commanded very high prices (often hundreds of millions per acre), leading many investors to seek alternatives in satellite towns. Cytonn Research notes that investors shifted to peripheral areas: average unserviced land in satellite locations (Juja, Utawala, Rongai) sold for ~KSh 17.9 m per acre in 2023, up 8.9% from 2022 cytonn.com. (In contrast, average NMA land prices were flat at about KSh 128.5 m/acre in 2023 cytonn.com.) The KNBS survey confirms this trend: Nairobi County held ~66.7% of listed urban plots, with Kiambu and Mombasa far behind (11.0% and 10.7% respectively)knbs.or.ke, indicating that prime city sites remain scarce. Heightened demand and Kenya’s strong population growth (urbanization ~3.7% p.a.cytonn.com) continue to drive competition for land, especially in fast-growing peri-urban markets.

Regional Market Highlights

Nairobi Metropolitan Area (NMA): As always, Nairobi is the epicenter. In 2024 the city and its suburbs continued to dominate supply and demand. New developments (mixed-use towers, gated communities) are concentrated along major corridors (Mombasa Road, Thika Road, Waiyaki, Limuru). Residential vacancy in Nairobi itself remains very low (most new apartments lease quickly), whereas suburban areas saw slightly slower sales. The KNBS survey found that Nairobi’s Upper and Upper Middle areas (Kilimani, Kileleshwa, Westlands, etc.) command the highest prices. Office completions mainly in Upperhill and Westlands absorbed slowly, pushing city occupancy down to ~70%. In contrast, the surrounding satellite counties (Kiambu, Machakos, Kajiado) are absorbing more development: Juja (Kiambu) led house-price growth at ~12.9% annual newstrends.co.ke, fueled by new projects and ease of access via the Eastern Bypass. Tatu City (Kiambu) and Konza City (Machakos) also continue drawing manufacturing/tech investment. Overall, Nairobi’s mid- and high-end housing markets remain tight – prime homes (e.g. in Karen, Kitisuru, Lavington) saw continued demand from executives and diplomats. Transit projects – the expanded Thika Superhighway, Nairobi Commuter Rail upgrades, and eventually the planned light-rail lines – are expected to improve connectivity, supporting development in formerly remote suburbs.

Mombasa and the Coast: Mombasa County contributes roughly 4.9% of Kenya’s GDP, making it the fourth-largest county economy after Nairobi, Kiambu, and Nakuru content.knightfrank.com. Tourism underpins the coast (about 45% of the region’s economic activity content.knightfrank.com), and 2024 saw hotel occupancy rebound. New luxury beach resorts and hotel renovations (e.g. Treetops reopening) have accompanied rising tourist numbers. The port and shipping sector (Mombasa handles ~15% of coastal GDP content.knightfrank.com) remain vital, and ongoing infrastructure works – the new Mombasa–Nairobi (Usahihi) Expressway, Dongo Kundu Special Economic Zone, and port expansion – are expected to widen land demand. On the ground, Nyali, Mombasa Island, and off-shore beach areas still dominate high-end residential prices; upcountry, places like Malindi and Kilifi are attracting boutique resorts. Retail development is accelerating in Mombasa city (e.g. expansion of Nyali Mall, downtown mixed-use projects). According to Knight Frank, coast authorities are emphasizing new prime residential projects (rivalling Nyali) and exploiting the Dongo Kundu SEZ to “revolutionize” the coastal industrial sectorcontent.knightfrank.com. However, KNBS data show coastal sales absorbing more slowly than Nairobi (only ~55.6% of listed properties in Mombasa sold in 2023 knbs.or.ke), suggesting pockets of oversupply or mismatched product in the market. Still, given new road links (Makupa Bridge grade separation, funding pledged for the Mombasa Gate Bridge) and a growing Mombasa middle class, the coast remains an attractive target for holiday-home buyers and logistics investors alike.

Nakuru and the Rift Valley: Nakuru County, part of the Nairobi metro growth corridor, also accounts for about 4.9% of GDPcontent.knightfrank.com. It is known for agriculture, manufacturing (breweries, horticulture), and logistics (SGR reaches Naivasha, roads to Uganda). Real estate in Nakuru town is on an upward trajectory: for example, Bondeni’s 605-unit affordable-housing project is complete, and Bahati’s 220-unit scheme is near finish kenyanews.go.ke, reflecting strong county support. However, KNBS notes Nakuru still needs ~10,000 housing units (with an 8,000-unit shortfall)kenyanews.go.ke. On the higher end, new gated communities are drawing Nairobi buyers seeking lower prices. Infrastructure (Nakuru Western Bypass, future SGR line north to Kisumu) is improving access, and Nakuru is increasingly a commercial hub. Land values around Nakuru (Naivasha, Rongai) have risen sharply, as the twin city area benefits from spillover growth. Kisumu County (pop. ~1.2m) plays a smaller role (coupling western Kenya and trade to Uganda). Kisumu’s economy (~1–2% of GDP) is tourism and services-oriented, with prospects from the Kisumu Port and an airport upgrade. The real estate market in Kisumu remains relatively modest – new shopping centers (Mega City, Ndogo Place) and apartments are underway, but overall demand is lower than in Nairobi/Coast. Ongoing road works (West Kenya Ring Road, Kisian road upgrades) will gradually open up peri-urban areas for development.

Kiambu County: Kiambu, immediately north of Nairobi, contributed about 5.7% of GDP in 2023 content.knightfrank.com, making it Kenya’s second-largest county economy. It blends suburban Nairobi with rural/agro areas. In 2024 Kiambu saw robust housing demand: satellite towns like Juja, Ruiru and Thika (along the Northern Corridor) recorded annual house-price growth of 8–13%newstrends.co.ke. This reflects new supply (e.g. Ruiru Mall, Grove Park, expansion of Thika Superhighway) and spillover from Nairobi. Kiambu also hosts Tatu City (a large integrated development) and the International Trade Centre. Because property supply is still catching up to demand, especially in upper-middle neighborhoods (Kiambu Road, Lower Kabete), prices remain elevated. The upcoming Eastern Bypass (Odawara–Dukuli) and planned Metro Line 7 (to Juja/Uthiru) will likely boost Kiambu’s growth further. For investors, Kiambu offers the appeal of Nairobi adjacency with slightly lower land and housing prices, making it a prime target for residential and light-industrial development.

2025 Outlook by Segment

Residential: Kenya’s overall housing market is expected to grow moderately in 2025. Continued population growth and urbanization underpin demand, but affordability constraints will temper price gains. We forecast Nairobi suburban house prices rising at a mid-single-digit pace (roughly 5–7% y/y), driven by detached homes and townhouses. Apartments in oversupplied areas (e.g. parts of Westlands/Kilimani) may see slower gains or modest corrections. Rental rates nationally should pick up slightly as inflation eases and wage growth returns, though rent growth is likely to stay below pre-pandemic levels. Mortgage uptake should improve with the CBK rate cuts, and KMRC refinancings will make 15‑year loans more available (although banks remain cautious). Developers will continue the “build-to-sell” trend targeting middle-income buyers in suburbs (e.g. Ruiru, Ongata Rongai, Kitengela), but with a sharper focus on delivery track records to regain buyer confidence. In Nairobi proper, expect mixed-use redevelopment: older office or retail sites (Upperhill, CBD) may convert to apartments as developers chase urban housing supply.

In luxury residential, demand should remain robust among the very affluent. The luxury home market (Karen, Muthaiga, Loresho, etc.) is insulated from mainstream affordability issues; we project continued luxury home price appreciation (perhaps 5–10% y/y) as high-net-worth individuals seek premium residences. Luxury vacation properties along the coast (south of Mombasa, and in Kisumu’s leisure zone) may see growing interest due to strong tourism. However, currency volatility and global headwinds may introduce some caution; foreign buyers may negotiate harder. Developers of high-end condos and villas will spotlight sustainability and security features to attract this niche clientele.

Commercial – Office: Weakness in the office sector is likely to persist into 2025. New Grade-A supply currently under construction in Nairobi (~750k sq.ft in the pipeline) may push occupancy rates down further unless demand picks up sharply content.knightfrank.com. We expect Nairobi prime office occupancy to hover around 70–75% through 2025. Rents will be under pressure, holding roughly flat (USD1.20–1.25/sq.ft) in real terms content.knightfrank.com. Landlords will focus on securing longer leases and offering concessions. However, demand may gradually strengthen as businesses reorganize after the 2023 elections and new companies enter the market (e.g. tech firms, financial services). Foreign companies eyeing East Africa often still consider Nairobi office space (with some requiring local partners). Investors should be cautious on new office builds; instead, refurbishing underused office blocks or converting them into rentals/co-working spaces could capture emerging niches.

Commercial – Retail: Retail remains a brighter spot. We anticipate continued absorption of new shopping space with occupancy staying high (>90%) in good malls content.knightfrank.com. In 2025, developers will likely add more retail targeting underserved middle-income catchments – e.g. community malls on highway junctions (a trend noted by Knight Frank)content.knightfrank.com. Demand for supermarket-anchored centers will persist as chains (Naivas, Quickmart, Carrefour) expand content.knightfrank.com. Rents for prime space may tick up modestly (5–8%) as incomes recover, while smaller local retail rents stay low. Significant opportunities lie in specialized retail (e.g. health/fitness, entertainment venues) and converting old shopping centers into mixed-use complexes (adding residential or office). Investors can also exploit retail yield spreads by investing in grocery-anchored centers, which offer stable income.

Industrial: The outlook for industrial real estate is strongly positive. Kenya’s ongoing shift toward manufacturing and e-commerce will raise demand for warehouses, factories, and logistics parks. Nairobi Gate SEZ and other parks (e.g. Tatu, Northlands) have visibility over expansions.content.knightfrank.com We expect new industrial completions (phased SEZ developments, cold-storage facilities, data centers) to remain largely absorbed – occupancy in modern warehouses should stay above 85–90%. Rents in the industrial suburbs (e.g. Syokimau, Thika Road corridor) may increase by 10–15% as supply lags demand. However, constraints (electricity costs, currency risk) could temper growth. Investors should monitor SEZ policies: the government’s warning to license-holders (to develop or lose SEZ land) suggests demand is outpacing delivery content.knightfrank.com. Prime opportunities include backing manufacturing-oriented projects (textiles, agro-processing) and acquiring land in new SEZs (e.g. Vipingo, Port Reitz) before values rise steeply.

Affordable Housing: Despite vigorous policy support, affordable housing will remain undersupplied. The government’s aim of 200,000 low-/mid-income units per year kenyanews.go.ke is far above current output (~50,000). In 2025, most affordable projects will be government or PPP-driven (county housing schemes, Habitat for Humanity projects, and the continued roll-out of the National Housing Corporation strategy). Nairobi’s own affordable-housing land release (especially in Dandora and Ruai) is expected but may see delays. Meanwhile, private developers will cautiously edge into the segment via build-to-rent or mortgage-backed schemes (especially as KMRC financing is available). Mortgage interest rates may drop slightly, encouraging some first-time buyers. However, rising land and construction costs will still limit volume. Strategically, investors should look to finance and build low-cost housing (e.g. prefab, modular units) in partnership with the government. The Nakuru case – where a 220-unit “Bahati” project (various one- to three-bed units) is set for mid-2025 completion kenyanews.go.ke – exemplifies the model: standardized housing sold at ~KSh1.6–4.3m per unit kenyanews.go.ke. Scaling such models nationwide remains an opportunity if funding and partnerships can be aligned.

Land Investment: 2024’s trend of relocating demand to peri-urban land is likely to continue. Satellite towns around Nairobi and other cities will see further appreciation, albeit possibly at a slower pace. For 2025, we forecast moderate land price gains (5–10%) in growth areas like Juja, Ngong, Kitengela, and Naivasha, driven by continued urban spillover cytonn.com. Conversely, the sky-high prices of central Nairobi plots (today ~KSh130m/acrecytonn.com) may plateau or even ease slightly as uncertainty lingers. Investors should target untitled or under-developed land in newly zoned residential zones, as infrastructure projects (roads, utilities) announced in late 2024 come online. Land in Mombasa County’s industrial corridors (Dongo Kundu, Changamwe) also looks promising due to the USHUSI Expressway and SEZ. Delcare advises caution on speculative land purchases purely for flipping, given that combined rents + growth (7–8% per year) still trail safe financial yields newstrends.co.ke. Instead, land owners should focus on development or long-term holds, as demand fundamentals (population and mortgage growth) remain strong cytonn.com.

Strategic Opportunities for 2025

Based on the above analysis, Delcare Properties identifies several investment strategies for 2025:

Suburban Residential Development: Invest in middle-income housing in Nairobi’s periphery (Juja, Ruai, Kitengela) where land is cheaper and demand is robust cytonn.com. Mixed-use schemes with integrated retail/office space can command premium.
Affordable Housing Partnerships: Partner with government and local authorities on large-scale low-cost housing projects. The financing gap can be bridged by KMRC-refinanced mortgages and innovative tenure models (rent-to-own, cooperatives)cytonnreport.comkenyanews.go.ke.
Industrial & SEZ Assets: Acquire or develop warehousing/logistics properties near Nairobi Gate, Athi River, Mombasa (Dongo Kundu) and emerging SEZs (Vipingo). These areas benefit from tax incentives and unmet demand content.knightfrank.comcontent.knightfrank.com.
Office Conversion and Coworking: Repurpose aging office stock in Nairobi and Mombasa for residential or flexible workspace. With city vacancy rates high, converting an underused tower could yield higher returns than speculation on new offices.
Premium Retail Leases: Target yield-hunting investors can acquire stakes in grocery-anchored malls and community centers. These assets have consistently high occupancy and inflation-linked rents. Expanding supermarket chains (Naivas, Quickmart) offer reliable co-tenancies content.knightfrank.com.
Land Banking in Growth Corridors: Carefully accumulated land in Nairobi satellite towns and secondary cities will pay off as infrastructure arrives. Key corridors include Nairobi–Malaba (Western), Nairobi–Garissa (North Eastern), and Mombasa–Malaba (East), with a view toward 3–5 year development timelines.
Luxury Boutique Projects: For equity investors, small-scale luxury developments (e.g. villas, serviced apartments) in prime areas (Karen, Nyali, Kisumu Lakeside) can attract foreign buyers and expatriates seeking unique assets.

Overall, 2025 should be a year of selective growth. Economic recovery and infrastructure expansion provide tailwinds, but global uncertainties and financing constraints require caution. Delcare Properties International remains optimistic: Kenya’s property market fundamentals (urbanization, a growing middle class, regional hub status) are strong. By focusing on differentiated products and long-term value, investors can capitalize on the trends outlined here.