Business

Property boom as the Nairobi Expressway nears completion

Property boom as the Nairobi Expressway nears completion

Construction of the Sh65 billion Nairobi Expressway will alter the value of real estate along the corridor and counties adjacent to the capital city, according to experts.

The road is nearing completion. However, the impact of this mega-infrastructure project on the value of the real estate is being examined.

Experts reckon that the 27-kilometre (km) stretch will result in the rezoning of some of the areas it passes through. Others argue the expressway may have minimal impact on the prices of properties, including land.

Institution of Surveyors of Kenya (ISK) President Abraham Samoei says the road will make Nairobi attractive for investments due to reduced traffic.

But in terms of being a driver of property value increase, it may not be significant since there are already other roads serving the city. The expressway will, however, ease traffic.

Samoei said traffic is the biggest driver for the expansion of roads which adjusts the value of land and property. This is, however, not necessarily the case with the Nairobi Expressway as it has been with other areas in the city.

“Let us take the case of Kilimani for instance. When they did the Ring Road from Westlands to Ngong Road, Kilimani slowly started changing to commercial because of that connectivity with the main economic link of Upperhill, Westlands and central business district,” he said.

Samoei says the connectivity has positively impacted property prices - enhancing the use of land and conversion to higher-order use.

This, according to Johnson Ndege, a property management consultant, will find some of the properties along the stretch or closer to the expressway converted to attract businesses in favour of hotels and office spaces.

This rezoning will, however, not be immediate - at least for office spaces.

“This will take some time. It is not an immediate effect perhaps mid to long-term given that we already have quite an oversupply of office space and the whole phenomenon of working remotely,” he said.

He says the conversion of spaces is likely to be witnessed around the Westlands area where some residential spaces may convert into offices and the areas rezoned to attract similar developers.

Ndege says the neighbouring counties, especially the Kiambu areas of Limuru and Kikuyu, would experience a positive change in property value due to the works ongoing on Waiyaki Way as well.

Machakos may also experience a huge impact due to improved travel time. Ndege says major highways impact heavily on undeveloped land in the suburbs and rural areas, which have the potential for commercial growth.

“But on a stretch within Nairobi, there will be a minimal improvement on land values and if there is, it will be where there is potential for change of user,” he explained.

For the expressway, travel time will be reduced. As such, it is expected that hotels around the stretch, and especially around Westlands will get more attraction.

“It (travel time) is perhaps one of the things why hotels cropped up around the airport. We expect demand to be higher for hotels and motels along the stretch,” he said.

“Issues to do perhaps with sustained occupancy of offices along the stretch because of again, easy travel time and especially for blue-chip companies.”

The ISK President says road expansions usually have a corresponding effect on the value of the land in the area.

The expressway is however being built on top of the existing one.

“Where the expressway is being done has limited land and now to expand the road, you just have to go up. When you see other sections on Mombasa Road, the expansion is on the ground because the corridors there are wide and even beyond ABC on Waiyaki Way, the corridor is (also) wide so you have more lanes,” said Samoei.

Dr Mwenda Makathimo, a land valuer and real estate expert, said the Nairobi Expressway will decongest many of the city’s areas.

“To the extent of decongestion then it causes an appreciation of property along the road,” he said.

He says that hospitality entities outside the airport that are served by the Nairobi Expressway are likely to have higher occupancy.

“This means the hotels around Westlands will have increased occupancy which means higher income hence higher values,” he said.

Makathimo says the expressway will also raise noise levels for properties and apartments that are closer to the road - lowering their value.

“But this is to a smaller degree since the Nairobi Expressway is centred where the highway is,” he said.

He said commercial properties whose business is linked to the airport will benefit in terms of value.

Samoei says the biggest traffic pressure has been through the city. “So it (expressway) may not have a big impact on property prices but of course the attraction of Nairobi goes up as an investment hub and reinforces that (Nairobi) can compete with other capital,” he said.

“So there might not be a direct relationship between property price increase and the Expressway.”