Kenyan based foreign professionals seeking business opportunities in Nairobi and beyond have driven uptake of serviced apartments to an all-time high 80 percent occupancy rate, reports Business Daily Africa.
The regional paper divulges real estate investment firm Cytonn says the expatriates and investors, who stay for more than 15 days a visit, have prompted new investment in serviced apartments ranging from five-star hotel-based residences to high-end serviced apartments.
“Compared to 2017 serviced apartments performed better in 2018, with the rental yields coming in at 7.4 percent compared to 5.3 percent. Occupancy has increased by 8 percent to 80 percent solely attributed to a better political climate in 2018,” it observed.
Serviced apartments allow a leasee to move into a fully furnished house where they can host guests as they wish while enjoying private occupancy during the period agreed upon.
In may 2017, Capital FM reported that Kenya’s luxury serviced apartment market needs over 1000 serviced apartments in the next three years due to increasing demand.
Britam Chief Executive Benson Wairegi said the demand for luxury serviced apartment is growing fast due to the growth of business tourism in the country.
In the same year, a report by Cytonn Investments showed that the serviced apartment subsector is performing better than hotels in Nairobi. Apartments, on average, recorded 90 percent occupancy rates while revenue per available room stood at $127 (Sh12, 874).
This occupancy was 29.6 percent higher than hotels and 33.5 percent cheaper on average than a hotel room.
A year later Cytonn says Nairobi, which had 3,414 serviced apartments as at 2015, will soon accommodate new 1,189 units set for completion by 2020. Among them are Skynest with 250 serviced apartments, Britam (163), Montave (147), Radisson Blu (123) and 9 Oak’s 120 units.
Kilimani—heavily patronised by the Chinese—serviced apartments enjoyed 86 percent occupancy giving investors the best returns at 10.9 percent rental yield, Westlands/Parklands node was at 10.6 percent and Limuru Road at 9.7percent.
The latest report said serviced apartments offering accommodation and food services were the most popular growing by 13.3 percent in 2016, 14.7 percent last year while 2018 has so far registered a 13.5 percent growth in first quarter and 15.7 percent in the second.
Studio apartments attracted a 13.5 percent rental yield at 82 percent occupancy followed by one-bedroomed apartments that earned investors a 9.4 percent rental yield with 79 percent occupancy. A two-bedroomed property yielded 7.7 percent rental income with 73 percent occupancy while three-bedroomed apartments attracted a 66 percent occupancy rate for a 7.2 percent rental yield.
Post adapted from Business Daily Africa