Kenya’s residential property market slowed in 2025, with demand for new homes easing alongside softer rental and selling prices compared to the previous year.
According to real estate consultancy Knight Frank, the moderation was largely driven by persistently high mortgage interest rates, which continued to weigh on affordability across the sector.
The sales price index rose by 6.17 per cent in the 12 months to December 2025, down from 8.27 per cent in 2024, while prime rents increased by 4.05 per cent, compared with 7.46 per cent the previous year.
“Despite steady demand for quality homes in prime locations, high average mortgage rates of 14.9 per cent and rising non-performing loans continued to constrain the market,” the report said.
The slowdown was also evident in construction activity, with residential building approvals falling 27 per cent year-on-year to October 2025.
In response, developers focused on completing ongoing projects rather than launching new ones, signalling a more cautious stance in the market.
During the second half of the year, significant investment flowed into master planned communities, reflecting a shift in buyer and investor preference towards integrated, amenity-rich developments rather than standalone projects.
Developers have also increasingly targeted high-quality gated communities and branded residences.
New developments in Runda, Kiambu Road and Limuru — including Phase 2 of Ineza, Runda Paradise and Tilisi — highlight sustained demand for secure, premium housing in Nairobi and its surrounding counties.
Another notable trend in the prime residential segment is the growing emphasis on high-end apartment living.
Land scarcity in Nairobi, coupled with a limited pool of buyers able to afford standalone homes priced above Sh100 million, has pushed developers towards high-specification apartment projects in Westlands, Riverside, Upper Hill and Kileleshwa.
These developments cater to upper-middle-class buyers and investors seeking rental income.
Looking ahead, the residential market is expected to remain active in 2026, supported by demand from high-net-worth individuals, expatriates and diaspora buyers.
Investment in large master planned communities, including special economic zones (SEZs), is forecast to continue, while developers are likely to prioritise the delivery of sustainable, modern units in prime locations.
A key structural trend will be the continued shift towards high-end apartments, including smaller one-bedroom units, although rapid supply growth in areas such as Westlands has introduced uncertainty around absorption and pricing.
