There are factors that determine the price of commodities in every market. These factors are more or less the same in every market with a few tweaks and difference of impact. If there is too much demand then the price is increased. If there is too much supply the price is reduced. It would therefore be safe to say that rent in the real estate industry is the fulcrum on which demand and supply of housing balance. If you are a renter in Nairobi, it would not hurt ton know how some of the rent levels are determined as well as the reasons for such stark differences.
1 Infrastructure
For the purpose of this list, this will be representative of roads. A good case stud would be Utawala. Before the bypass was built, Utawala was basically the wilderness. It was only known because of the GSU camp there. Otherwise it was a place of no consequence. It perhaps only mattered to people worked at the airport. As soon as the bypass was built, it became a popular place to live as an alternative to the crowded Embakasi. The rent is still relatively affordable but it is teetering right on the edge.
Another case study would be Thika road neighbourhoods most especially Roysambu. You will note that the houses right next to the highway are more expensive than those on the lower Roysambu or Zimmerman (44 side). A bedsitter in the former area is 7000 shillings while the same in the latter area is 5000 shillings. A difference of 2000 because of proximity to the superhighway. In Kenya and especially Nairobi, roads are a big determinant of how much rent you will be charged. In fact property listings will use this as a strength.
2. Proximity to CBD
How close is the house to town? How long does it take to get to the CBD? Can you walk to the CBD? How much does a matatu cost from the CBD to the house? You will pay fare of 30 shillings from town to Madaraka, maybe 50 if it is raining or at peak time. The rent for a bedsitter there is 10000 shillings at least. Compare that to the bedsitter in the above point. The same applies to other proximal areas like Westlands and South B. Rent will always be more the closer you get to town or the less you pay in transport.
3. Neighborhood
Which area is it? Surely you would not expect to find a 5000-shillings a month bedsitter in Runda? Your expectation of rent level should be informed by the area. Some are suburban privilege while others are slum adjacent survival. A small part of the reason for higher rent in the affluent areas is to keep the prestige of the place, nothing extra. If you are new to Nairobi then do a little research so you know what to expect and where to expect it. If you go in blind you will be disappointed and embarrassed.
4. Target Tenants
Landlords always have a target tenant in mind when they are building. Some target students while others target the upwardly mobile. Others will target families while others target lower income single people. This will be evident by the kind of building you are looking at. You can tell that resources were applied with the aim of attracting a top tier tenant. You can also tell where the application of resources was economic with a minimalist approach. The landlord will demand rent depending on the kid of tenants they want to attract.
5. Amenities
Whatever establishment is close could also determine the baseline rent for that place. For example, note the difference in rent between a house at the Madaraka shopping centre and one at the estate right opposite Strathmore University. Another example is the difference in rent between a house right behind TRM on Thika Road and one that is, say, a kilometre away from the mall. This rule is true in most instances where the rent increases with regards to how close an establishment or certain amenity is.
6. Offerings
Different landlords have different ways of running their building. Some will provide Wi-Fi, CCTV and secure parking. Others will make do with the bare minimum. One building will have a spacious kitchen with fitted cabinets while another will provide a very tiny corner with a sink as the kitchen and call it functional kitchen. That usually means that you have to reverse out of it. You should not expect that those two buildings will be in the same league in terms of rent. You should always keep in mind that the more features and utilities there are, the higher the rent is going to be.
7. Age of building
In most cases, rent in a new building will be higher than the baseline and in most of the other buildings around. Some landlord would like to recoup their investment so they can start to get returns. Others simply want to capitalise on the building while everything is new and shiny. In very few cases, the newest buildings will have the lowest rent. This is especially common in rural areas. This is used as a ploy to fill up capacity of the building and increase popularity at the early stages.
8. Economy
The recent economic times in Kenya have prompted different actions by different landlords. There have been cases of landlords announcing a decrease in rent due to the difficult times. Others are announcing increases for the same reason. The economy is a very big determinant of how much rent is going to be at the lowest level as well as whether it will be adjusted during your residence. These factors are important to keep in mind as you go house hunting. With the baseline rent in mind as well as these factors in mind, you can almost accurately discern if you are getting a good deal or not. Value lies in what you get out of the price demand
