UN eases landlords’ pain in city leafy suburbs

Staff working on US-funded projects withdrew children from school and abandoned rental properties in Runda, Muthaiga, and Kitisuru – areas often dubbed the “Beverly Hills of Nairobi.”

Now, the United Nations has come to the rescue as Nairobi’s upscale neighbourhoods prepare for an influx of international staff.

By 2026, major UN agencies, including the United Nations Children's Fund (Unicef), the United Nations Population Fund (UNFPA), and UN Women, may relocate their headquarters from high-cost Western cities to Nairobi, part of the UN80 reform agenda to decentralise operations to more cost-effective regions.

For Nairobi – a bustling metropolis of five million people – the move promises to cement its status as one of four global UN hubs alongside New York, Geneva, and Vienna.

But transformations are already visible. Vacated high-end properties in the wake of USAid closure have since got new occupants, fuelled by the UN expansion plans.

“Even before the announcement of the planned UN expansion in Kenya, the prime residential market was already experiencing upward pressures, largely driven by a persistent supply gap in quality stock and growing demand for existing units,” said Knight Frank, a multinational estate agent.

“The February announcement that three UN offices will expand into Kenya is expected to further amplify this demand. The withdrawal of USAid funding had little to no impact on this segment, as outgoing tenants were quickly replaced, further demonstrating the strength of demand.”

Knight Frank’s sales price index showed that the prime homes saw a 5.63 percent growth in auction cost in the second half ending June, with a rally coming in the second quarter after a sluggish three months to March.

A separate report from Hass Consult, which conducts the property pricing index in Kenya, shows that property prices in upscale Nairobi increased 3.8 percent in quarter two—the fastest pace in 18 months. It grew 2.45 percent in quarter one.

“There is a general lack of supply of detached houses, leading to the increased prices,” said Hass Consult co-CEO and creative director Sakina Hassanali.

The gated communities of Runda, Muthaiga, and Kitisuru are preparing for an influx of international staff.

This includes fast-tracking construction of upscale housing units, as well as expanding restaurants, long-stay hotels and international school campuses.

This is a reversal of events witnessed earlier in the year following the USAid fallout, which revealed the extent to which American assistance trickles into the economies of recipient countries.

Hundreds of expatriate aid workers, either directly or indirectly employed by USAid, languished without pay, were uncertain about schooling for their children, and in some cases, were poised to leave the country.

Estate agents anticipated a dip in rental markets in the leafy neighbourhoods of Nairobi, while financial analysts predicted a slight softening in the value of the shilling.

In 2023, the last year for which official data is complete, Kenya received $850 million (Sh109 billion) in US aid, backing more than 230 projects to varying degrees.

Projects in higher education, hospitality training for orphans, drought mitigation and water sanitation, all stalled with the stroke of Mr Trump’s pen.

Banks were declining to provide emergency loans, uncertain if the tap would ever be turned back on.

“Developers cannot quickly meet the excess need for purchasing land and constructing new prime residential properties, which typically require 30 to 36 months, while the anticipated arrival of UN staff is within 24 months of the announcement,” Knight Frank said.

The Landlords and Tenants Association of Kenya reckons that the UN’s settlement in Nairobi could yield a 10 to 11 percent increase for long-term rentals.

In Nairobi, luxury homes and upscale living are often found in neighbourhoods like Runda, Muthaiga, Gigiri, Lavington, Kitisuru and Karen, with Gigiri being a popular choice for diplomats and expatriates.

Rental listings on Knight Frank show that a five-bedroom house in Runda fit for a diplomat attracts a monthly price of Sh838,563.89 while a six-bedroom house in Loresho Ridge has a monthly price of Sh500,000.

A five-bedroom listing in Karen by realtor Pam Golding has an asking rent of Sh650,000 per month, while a six-bedroom house in Kitisuru attracts a rental charge of Sh517,440 or $4,000.

Demand for space in elite schools like the International School of Kenya (ISK), Hillcrest, Brookhouse and Braeburn is expected to rise.

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