Investors are losing appetite for buying land in satellite towns 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.
Land-price appreciation in 12 of the 14 satellite towns tracked by property firm HassConsult over the year to September 2026 was lower than the cumulative returns from rolling over 91-day Treasury bills, highlighting the weakening appeal of holding undeveloped plots purely for capital gains.
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 and declines of between 0.2 percent and 2.3 percent posted in 12 of the 14 satellite towns tracked by HassConsult.
“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,” said Sakina Hassanali, HassConsult co-CEO and creative director.
“This could signal a gradual shift towards more use-driven investment in some of Nairobi’s satellite towns, particularly as these markets mature.”
The report showed 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.
Over the same one-year period, 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, all lagging the return on rolling over a 91-day paper for a year.
Rolling a 91-day Treasury bill for a year means reinvesting the principal and the earned discount across four consecutive quarters. Out of the satellite towns tracked by HassConsult, Thika at 9.3 percent and Ruiru (11.5 percent) were the only ones to beat the short-term government paper on returns.
The figures point to a market where investors can no longer assume that buying undeveloped land and waiting for its value to rise will deliver competitive returns. The findings could push investors to consider other factors such as gains from putting the land into economic use.
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, being 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.
The slowdown was more pronounced in Ruiru, Thika and Ruaka, which had recorded stronger price growth in the previous quarter. 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 changing economics of land investment are also playing out against a slowdown in the satellite-town housing market, where property asking prices fell for the second consecutive quarter.
HassConsult’s House Price Index shows that asking prices for residential properties in satellite towns declined by 0.6 percent in the third quarter to an average of Sh14.43 million, extending the contraction recorded in the previous three months.
Ngong saw the steepest quarterly decline in house prices at 1.2 percent, followed by Ongata Rongai at one percent, Juja at 0.6 percent and Kitengela at 0.5 percent.
Rental asking-price growth in the satellite towns also slowed to 0.4 percent from 1.1 percent in the previous quarter, suggesting that landlords are facing a less attractive environment for generating income from residential property.
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 index shows the average price of an acre has jumped to Sh33.7 million by September 2026 from Sh2.4 million in December 2007.
Satellite towns had seen strong demand from buyers that sought to acquire plots in emerging residential areas before infrastructure, population growth and commercial activity pushed up values.
However, the latest figures suggest that the returns from such a strategy are becoming less assured when compared with investments that generate interest income without the costs associated with holding undeveloped land.
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.
“In Nairobi’s established suburbs, where the supply of houses remains relatively constrained, improving financial conditions may be adding to upward price pressure, contributing to the stronger appreciation recorded during the quarter,” said Ms Hassanali.
