Cost of owning homes in key East African cities

If you are a businessman, a businesswoman, or a tourist who criss-crosses East African capitals to invest in housing or go for holidays to Nairobi, Kampala, Dar es Salaam or Kigali, the cost of luxurious accommodations vary in each of the four cities.

The costs of high-end hotel rooms - five-star hotels can vary from one place to another. What you are likely to pay in Nairobi per day ranges from Sh29,900 to Sh45,325.

The same accommodation goes for between Sh32,375 to Sh51,800 in Dar es Salaam, Tanzania, and Sh19,425 to Sh32,850 in Kigali, Rwanda.

For Kampala, Uganda, it is about Sh12,950 to Sh32,375. “A luxurious stay in Dar es Salaam will cost you a bit more than Nairobi, while Kampala offers the best value and is cost-effective for a similar experience,” says Archie Obudo of Sarabi Realty Group, a real estate agency based in Nairobi.

This is due to Dar es Salaam’s status as a major regional commercial and port city, which attracts a high volume of business travellers and foreign investors, who drive up demand for premium accommodations.”

 Kampala’s relatively lower market contributes to more affordable rates.

And when it comes to construction costs in the four East African cities, building a home is a big deal.

“Nairobi, relatively still, offers affordable places to build; the average cost is Sh101,675 per square metre, Kigali Sh146,555, Kampala Sh136,295 and Dares Salaam Sh155,400,” reveals Charles Ayoro, Managing Director of Real Estate Associates Ltd. It is cheaper to develop property in Nairobi than in Kigali, Dar es Salaam and Kampala.

The high costs in Kigali are driven by a combination of many factors, including materials, which increase their prices by nearly 50 per cent, says Ayoro.

He noted that Kampala and Dar es Salaam are also elevated due to high costs of materials and transportation, which are sometimes catered for by the developers or the buyers. 

 Nairobi benefits from more developed local building materials, market and a more competitive supply chain.

For housing costs, buying and renting, Ayoro and Obudo say this is where the real daily life expenses come into play. Renting a two-bedroom house in Nairobi’s leafy or high-end states like Muthaiga, Lavington, Runda, Karen, Kilimani, Kileleshwa, Kitsuru, among others, ranges from Sh100,000 to Sh150,000, while a three-bedroom house rents at Sh130,000 to Sh200,000.

In Dar es Salaam, a two-bedroom house in high-end estates goes for between Sh40,000 to Sh100,000, a three-bedroom house from Sh80,000 to Sh150,000. In Kigali, a two-bedroom house costs between Sh65,000 and Sh110,000, and a three-bedroom house goes for Sh90,000 to Sh155,000.

In Kampala, two-bedroom houses go for Sh25,000 to Sh60,000, a three-bedroom houses Sh35,000 to Sh90,000.

And buying a property or house in the four capital cities of East African States - Nairobi two-bedroom house in a good estate goes from Sh9 million to Sh15 million, a three-bedroom house in Sh12 million to Sh33 million.  

In Dar es Salaam, a two-bedroom house goes for Sh9 million to Sh11 million, a three-bedroom house for Sh12.5 million to Sh20 million.

In Kampala, a two-bedroom house goes for between Sh3.3 million and Sh6.5 million, a three-bedroom house for Sh12.9 million to Sh32 million, while in Kigali, a two-bedroom house goes for between Sh7 million to Sh10 million, and a three-bedroom house goes for between Sh20 million to Sh45 million.

Economic powerhouses

 According to Obudo and Ayoro, the cost of buying and renting in prime areas of Nairobi and Dar es Salaam is higher than in Kigali and Kampala, and this disparity is due to many factors.

Both Nairobi and Dar es Salaam are major economic powerhouses in the region, and they both attract a large number of professionals, expatriates and foreign investors.

 “This high demand, coupled with limited land supply or inadequate land available in prime areas, drives up property prices. Still, both Nairobi and Dar es Salaam are experiencing rapid population and urbanisation growth, thus creating high demand for housing that outpaces supply,” says Obudo.

 He notes that Nairobi’s real estate market, in particular, is more mature and developed, with a wide range of investment options and a history of appreciating property values, which sustains high prices.

 In contrast, while Kigali and Kampala are growing, their real estate markets are still developing. A lower cost of living allows for affordable housing options, according to  Ayoro. 

Meanwhile, a report by Economist Intelligence Unit’s World Cost of Living indicates that the cost of living is more expensive in Nairobi than in many African cities. The report singles out payments of rents in affluent estates as one of the reasons why living in Nairobi has become difficult for expatriates.

Nairobi is placed at 69 globally in terms of expensive cities. 

This is in sharp contrast with Lagos, which is 127, thus placing the Nigerian commercial capital among the 10 cheapest cities in the world.

Apart from rent, the other findings by the report were based on a comparison of more than 50,000 individual prices of 160 products and services. The report is usually used by institutions to help calculate the costs of rents, building, among others.

 The report says an international investor would prefer buying a home or a house in Cairo and Lagos more than doing so in Nairobi. Hospitality and real estate are some of the most preferred businesses by foreign investors.