Speculators lose bet on satellite towns as land price gains shrink

Investors in Kenya's satellite towns are losing appetite for buying land in anticipation of selling at a gain as price appreciation in many areas falls below the returns they would have earned from investing in Treasury bills. According to property firm HassConsult, land-price appreciation in 12 of the 14 satellite towns tracked over the year to September 2026 was lower than the cumulative returns from rolling over 91-day Treasury bills. The average interest rate on the recently auctioned 91-day T-bills was 8.75 percent compared with gains of between 0.2 percent and 6.2 percent in the satellite towns.

The report showed that there were annual declines in land prices of 2.3 percent in Athi River, 1.9 percent in Ngong, 1.2 percent in Kiambu, 0.8 percent in Mlolongo, 0.5 percent in Kiserian and 0.2 percent in Tigoni. On the other hand, gains in land prices averaged 0.2 percent in Syokimau, one percent in Kitengela, 2.2 percent in Limuru, four percent in Ongata Rongai, and 6.2 percent in Ruaka. Only Thika at 9.3 percent and Ruiru at 11.5 percent were able to beat the short-term government paper on returns.

According to Sakina Hassanali, HassConsult co-CEO and creative director, satellite towns have historically attracted buyers investing in land for future capital appreciation. However, as returns from passive landholding become less competitive with alternative investments, the economic justification for purchasing land may increasingly depend on its intended use. This could signal a gradual shift towards more use-driven investment in some of Nairobi's satellite towns, particularly as these markets mature.

The changing investment dynamics come as land prices in Nairobi's satellite towns grew at 0.65 percent in the third quarter ended September 2026, a slower rate than the 1.4 percent in the second quarter. HassConsult's third-quarter 2026 Land Price Index showed the average price of an acre in the satellite towns rose to Sh33.7 million, with annual appreciation standing at 4.3 percent. Nine of the 14 satellite towns posted positive price movements, compared with seven in the preceding quarter.

Ngong recorded the highest quarterly land-price appreciation at 2.19 percent, while Mlolongo posted the biggest quarterly decline of 2.2 percent. The slowdown was more pronounced in Ruiru, Thika and Ruaka, which had recorded stronger price growth in the previous quarter. The findings could push investors to consider other factors such as gains from putting the land into economic use.

The combination of slower land appreciation, declining residential property prices and weaker rental growth makes for a worrying outlook on the level of returns investors can expect from holding undeveloped plots in these markets for resale. Booking higher returns on reselling undeveloped land calls for a longer-term view, based on HassConsult's index, which indicates that land values in the 14 towns have increased 13.8-fold since December 2007.

The slowdown in satellite towns contrasts with the performance of established Nairobi suburbs, where residential property prices are gaining momentum amid lower borrowing costs and constrained housing supply. House asking prices in Nairobi's established suburbs rose by 2.3 percent in the third quarter, up from 0.9 percent in the previous three months, marking the strongest quarterly appreciation in four years.

Key points

• Land price appreciation in 12 of 14 satellite towns tracked by HassConsult was lower than the cumulative returns from rolling over 91-day Treasury bills.
• Only Thika and Ruiru were able to beat the short-term government paper on returns.
• The slowdown in satellite towns contrasts with the performance of established Nairobi suburbs.