Nairobi Metropolitan serviced apartments 2020

Serviced apartments within the Nairobi Metropolitan Area (NMA) recorded an average rental yield of 7.6% in 2019, 0.2% points higher than the 7.4% recorded in 2018. This was attributed to a 2.3% increase in monthly charges per SQM, from Sh2,742 in 2018 to Sh2,806 in 2019, fuelled by the continued demand for serviced apartments by both guests on business and leisure travels. The improved performance was overally supported by the stable political environment and improved security, thus making Nairobi an ideal destination for both business and holiday travellers.

The hospitality sector was the worst hit by the COVID-19 pandemic as businesses either closed down completely or operated under minimal capacity. This was mainly due to the reduced number of tourist arrivals as the Government issued a travel ban on international flights into and outside the country and the restriction of movement in select cities within the country. As a result of the fear of contracting the virus and adhering to social distancing measures enforced by the Government, hotels and restaurants recorded significantly low occupancy rates especially in Q2’2020 and Q3’2020.

The negative impact of the pandemic is evidenced by the decline in the hospitality sector’s contribution to GDP through accommodation and food services by 83.3% during the second quarter of 2020 compared to an expansion of 12.1% during the same period in 2019, according to the Kenya National Bureau of Statistics (KNBS) Quarterly Gross Domestic Product Report – Q2’2020. The total number of international arrivals through Jomo Kenyatta International Airport (JKIA) and Moi International Airport (MIA) recorded a 71.5% decline from 1.2m persons between January and September 2019 to 0.3m during the same period in 2020. This is however an increase from 13,919 persons in August 2020 to 20,164 persons in September 2020 according to the KNBS – Leading Economic Indicators – September 2020, indicating the gradual recovery of the tourism sector. Despite this, the sector has remained resilient evidenced by investor focus, with Accor Hotels and Radisson Hotel Group announcing that they would continue with their expansion plans in Kenya and the African region as a whole despite the slump in the sector due to the COVID-19 pandemic.

Additionally, Hyatt, a US-based hospitality chain announced plans to build a 225-room facility in Nairobi along Mombasa road, marking the brand’s entry into the Kenya hospitality market. The move by these brands shows investor confidence in the Kenya’s hospitality industry despite being one of the hardest hit by the COVID-19 pandemic

Some of the factors that have continued to cushion the hospitality sector include gradual recovery of the tourism industry. The relaxation of travel advisories and reopening of Kenya’s key tourism markets is expected to enhance recovery of the tourism industry thus a resultant boost to the hospitality sector; Post-Corona Hospitality Sector Recovery Stimulus by the Ministry of Tourism aimed at offering financial aid to hotels and other establishments in the hospitality industry through the Tourism Finance Corporation (TFC); Repackaging of the Tourism Sector products to appeal to domestic tourists; Improved security and; Travel toursism, one of the key drivers of Kenya’s hospitality sector

Serviced apartments

A serviced apartment is a type of furnished apartment available for short-term or long-term stays, which provides amenities for daily use and housekeeping services all included in the rental charges. The serviced apartments provide facilities much like the traditional hotels however, they have added space, convenience and privacy just like home so that the occupants get to enjoy their stay. The concept of serviced apartments has been popularised over the years as travellers continue to find them more convenient, credible, easily available and cost effective. They are also convenient for families and people who opt for the longer stays.

Serviced apartments come along with other advantages including extra room services offered as opposed to traditional hotels such as laundry services and general housekeeping and are substantially cheaper than a hotel room when staying for a longer period of time. For example, a standard 3-star hotel in Nairobi, Gigiri area charges on average Sh6, 500 per night for a suite, while a studio serviced apartments charges on average Sh5, 600 per night within the same location. They also offer a “home far from home” feel compared to hotels. They have utilities available which make them more comfortable and convenient, and offer ease of integration, as the concept offers guests a chance to integrate with the larger community as they are located within or in close proximity to other residential developments. Some serviced apartments are designed to resemble the culture of some specific areas. This gives insight into what a real local apartment would look like, giving a more comprehensive immersion of the culture and values compared to hotel rooms, which usually all look alike. Then there’s the ease of conversion – they can be easily converted into furnished or normal apartments in the case where the former is not performing well.

Supply and distribution

The number of serviced apartments within the NMA increased by a 6-Year CAGR of 8.6% to 5,594 apartments in 2020, from 3,414 apartments in 2015, with one of the key facilities coming into the market this year being 106-room Emara Hotel Ole Sereni located along Mombasa Road. 

In terms of distribution, Westlands and Kilimani have the largest market share of serviced apartments within the NMA, at 38.4% and 26.3%, respectively. This is attributed to the attractiveness of the areas due to proximity to the CBD and other major business nodes such as UpperHill and Westlands; relatively good infrastructure within the area; high presence of international organizations such as International Committee of the Red Cross (ICRC), Oxfam and Save the Children International, and, availability of social amenities such as shopping malls within the area.


Serviced apartments within the NMA recorded an average rental yield of 4.0% in 2020, 3.6% points lower than the 7.6% recorded in 2019. This is attributed to declines in monthly charges per SQM and occupancies from Sh2, 806 to Sh2, 445 and from 79.4% to 48.0%, respectively. The decline in performance is attributable to subdued demand for hospitality facilities and services due to the COVID-19 pandemic. Some serviced apartments have also been issuing discounts to attract and maintain clients amid a tough economic environment occasioned by reduced disposable income. 

Overall, serviced apartments’ performance softened with the occupancy rates declining by 31.3% points to 48.0% from 79.4%; the monthly charges per SQM also declined by 14.9% from Sh2, 806 to Sh2, 448 while the average rental yield declined by 3.6% points to 4.0% in 2020 from 7.6% in 2019. This is mainly attributable to a reduction in the number of tourist arrivals due to the COVID-19 pandemic, and the tough economic environment. 

In terms of performance by typology, studio units recorded the highest average rental yield at 5.4%, mainly attributed to the relatively high occupancy rates at 49.6%, compared to 1, 2 and 3 bedroom units at 44.9%, 49.0% and 49.0%, respectively, and a 27.7% higher charge per SQM of Sh3, 276 compared to the market average of Sh2, 565, amid the relatively low supply of the typology in the market.

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