Syovata Ndambuki

Location: Nairobi, Dagoretti Sub-county

Distance: 12 KM from CBD

Route: Ngong Road

Popular Property type: Apartments, Rental Income Properties

Over the past three years, properties in Riruta have risen to popularity. Multiple developers have been launching projects in the locations, targeting savvy investors. What does Riruta have to offer for investors? In this article we look at occupancy rates, rental income, property prices and short term stay opportunities.

Infrastructure

Riruta is mainly accessibly through Ngong road, Naivasha Road and Kikuyu Road which also connect to Dennis Pritt Road. The neighbourhood is surrounded by a rich network of roads and residents can access multiple locations without necessarily going through the CBD- a fact that contributes to the location’s popularity.

In December, 2023, President William Ruto launched the Riruta-Ngong Commuter Railway which is set to ferry over 10,000 people daily once completed. The Railway extends all the way to Kajiado county and connects Riruta to Karen and Ngong, advancing the location’s accessibility.

Property Types

Most properties for sale in Riruta are apartments. The location started off as a settlement for standalone housing units, when the initial settlers started building. With time, however, as development spread across Nairobi, Riruta has become more attractive to middle class renters.

This transition, has attracted developers who have launched apartment projects, which could be placed in the affordable category. The units on sale range from studios to 3 bedroom units targeting different types of buyers.

Return on investment

Riruta is an attractive market for people looking to invest in rental properties. As it is with buy to rent properties, studios, one bedrooms and sometimes 2 bedrooms tend to be the most ideal for such investments. So, how much rental income should you expect to make from an apartment in Riruta?

In 2024, a studio apartment should earn approximately, KShs. 14,000 if rented out. One bedroom units can fetch, Kshs, 20,000 to Kshs. 25,000 monthly while a two bedroom unit will earn Kshs 40,000 to 45,000 per month depending on the apartment’s exact location, design and amenities offered. 3 bedroom units, are charged at Kshs 50,000 to 55,000 in 2024

Can you use the income earned through rent to clear your installments? Depending on the payment terms a developer offers, an investor buying a unit in Riruta can make monthly installments through rent paid by a tenant if they can maintain a high occupancy rate. However, tenants tend to be unreliable as they do not always pay rent on time.

Occupancy Rates

Speaking of occupancy rates, Riruta does enjoy a relatively high occupancy rate, due to its strategic, accessible location. According to a 2020 report by the United Nations Population Fund (UNPFA), the annual rural to urban migration in Kenya was estimated at 277,000 youths, who migrated to urban centers between 2015 and 2020.

The 2019 census by the Kenya Bureau of statistics revealed that 75.1% of Kenyans are below 35 years old. Majority of the Rural Urban migrants are aged between 20 and 24 years. With such a youthful population, Kenya is expecting the rural-urban migration rates to stay up.

But what does this mean for the property market, more so, the rental sector? It means there is high demand for rental housing and rental properties in Nairobi will continue to enjoy high occupancy rates. In the coming years, a rental property in Nairobi or other major city will be an enviable investment – especially if it targets the low and middle income social classes.

Real Estate Investing for Beginners: Capital Gains vs Occupancy Rates

Alternative Income Sources

The potential for short term stays rental or furnished apartments business model is also relatively high. The occupancy rates for this type of rentals may, however, be lower given the stiff competition Riruta gets from nearby Kilimani.

According to data by AirDNA, an AI powered analytics and data collection platform that provides data on short term stays, Nairobi had over 37,000 short term/vacation stay listings, with 94% being on AirBnB. One bedrooms had the highest number of bookings, with a 59% market share. The overall occupancy rates in the county, over the last 12 months stands at 11%.

Short term stays rely mainly on travel. The more people travel, the higher the occupancy rates.

Property Prices

According to property listings, apartment units in Riruta range from Kshs. 1.9 million to 10 million depending on exact location and unit size. The average price tag on one bedroom units is 3 million while 3 bedroom units are selling between 6.5 million to 10 million depending on the exact location, amenities and the developer. The cheapest unit to hit the market was 1.9 million in 2022.

Projects in the more serene parts or Riruta, have a higher price tag while those in the busier locations meant for rental purposes have lower prices tags.