Apartments in Westlands has recorded the best performance recording an average rental yield of 6.1 per cent in 2020, 2.1% points higher than the 4.0 %market average.
This is according to Cytonn Nairobi Metropolitan Serviced Apartments 2020 report which attributed to the proximity to business nodes such as Kilimani and Nairobi CBD, availability of amenities such as shopping malls and ease of accessibility
Kilimani was the second best performing node with average rental yields of 4.8% compared to market average of 4.0%. However, a decline of 4.7% points attributed to 31.6 per cent decline in occupancy rates and 20.5% correction in the monthly charges per square metre.
The report notes that serviced apartments within the Nairobi Metropolitan Area recorded an average rental yield of 4.0% in 2020, 3.6% points lower than the 7.6% recorded in 2019. This is attributed to declines in monthly charges per square metre and occupancies from Sh 2,806 to Sh 2,445 and from 79.4% to 48.0%, respectively.
Decline in performance
The decline in performance was also caused by subdued demand for hospitality facilities and services due to the COVID-19 pandemic which saw the government ban all international flights and local flights into Mombasa and Nairobi, implement partial lockdown within the NMA among other restrictive measures that were aimed at curbing the spread of the virus.
Some serviced apartments have also been issuing discounts to attract and maintain clients amid a tough economic environment occasioned by reduced disposable income. Thika Road recorded the lowest rental yield at 2.0%, and this was attributed to the relatively low charge rates for apartments within the area, given its unpopularity, due to lack of modern and quality serviced apartments in the area, the significant distance from main commercial zones, in addition to security concerns as the area is not mapped within the UN Blue Zone.
