Rental Market in Mombasa

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Although there is a high demand for rental properties, and rental costs are significantly higher in Mombasa, attracting good yields for property owners, the rental yields can be better.

As more people move from interior Kenya and others from overseas countries into Mombasa city, either for work and business prospects, or to enjoy the white sandy beaches, primordial architecture, diverse wild and marine life, tropical climate and the warm salty sea waters, renting accommodation and leasing properties becomes an essential basic need.

The establishment of better-planned housing units, introduction of high-end luxury apartments and the increased ease in access to mortgage and property loans by local financing institutions in Mombasa all mean that rental yields should start to grow rapidly.

Availability of rental properties within Mombasa’s CBD

Similarly to Nairobi, rental properties, both commercial and residential, within Mombasa’s CBD are hard to come by and when you finally do find a prospective rental property, it is always a hard bargain.

  • The amount of rental deposits asked from new tenants are significantly high within the CBD, where you might be forced to make 3-6 months deposit fees
  • The high rental costs are associated not only with the marketability of the CBD properties but also with the lack of sufficient supply of properties to accommodate the increased demand (given that most buildings are only several stories high). A lot needs to be done in regards to investing on vertical spaces.
  • The trend of partitioning large commercial rooms into small competitive stalls prevalent in Nairobi is rapidly catching on in Mombasa.Kizingo is the most prime residential area within the CBD, hosting the city’s provincial headquarters, law courts, municipal council, and reputable private and public schools.Middle-income properties within the CBD are Ganjoni and Tudor, located within Mombasa island.
  • Commercial property owners seek to increase their rental yields while accommodating small business traders who may otherwise not be able to afford large commercial/office spaces.

Availability of rental properties outside Mombasa’s CBD

Outside the CBD, rental properties in certain areas, such as Mtwapa, Utange, Diani and Vipingo, have registered up to 100% growth in the recent past, attracting handsome rental yields

  • Properties outside the CBD are proving to be the new frontier in real-estate development as more high-rise buildings and luxury apartments dominate the scene and as people discover the value of real estate located at the Coast (which is associated with the tourism package).
  • The rapid inflow of locals from interior Kenya and foreign expatriates into Mombasa, who aim to capitalize on emerging business opportunities across the coastal region, has contributed to the skyrocketing rents in the city’s properties, especially those located outside the city and in high-end neighborhoods

Tenancy

The chief method of tenancy in Mombasa is periodic tenancy with properties being leased periodically (monthly or annually) until the tenancy is terminated.

  • Low-income tenants
    • Live in areas such as Mnazi Mmoja and Shauri yako in Kongowea in semi-permanent structures.
    • Rents are between Ksh500 – 1000 for single rooms
  • Lower middle income tenants
    • Rents are between Ksh5000 – 7000 for 1br houses
  • Upper middle and high income earners
    • Can afford upwards of Ksh40,000 for 3br apartments in estates such as Nyali, Utange and Mtwapa, etc.

Rental yields

The cost of land in Mombasa city has more than quadrupled in recent years. The current rental index is 7.8.

  • On average and based on the location of property:Beginning in 2010, rents have risen by over 35% with rapidly growing areas, such as Mtwapa, showing rent prices ranging between Ksh20,000-25,000 for gated, 2br houses.A 1br apartment within CBD costs between Ksh15,000 – 20,000 to rent while a 3br apartment ranges between Ksh32,000- 40,000.
    • Plots measuring 50 by 100 feet presently sell at Ksh2.5million
    • ΒΌ acre of land sells for around Ksh4 million
  • Outside the city center, a 1br apartment costs between Ksh5,000 – 15,000 to rent while a 3br ranges between Ksh17,000 – 25,000.

Caution

As the appetite for property in Mombasa city increases, it is important that the municipal council, investors and developers among other stakeholders safeguard against unplanned neighborhoods by promoting quality property planning.

A tin of paint, a roller brush and a few hours work can change the look of a room, updating the color and making it clean and fresh – a great way to add value to a rental or prepare a property for sale



Source by James E Harrison

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