Cost of homes up as UN offices move to Nairobi

The planned set-up of three new United Nations (UN) global offices in Nairobi is expected to revive interest in high-end properties in the city, with real estate consultant Knight Frank projecting increased prices.

Asking prices of residential properties in high-end markets in the city have stalled or dropped, following the exit of the expatriates’ niche market linked to the United States Agency for International Development (USAID).

USAID ceased operations in July this year after months of scaled-down activities once President Donald Trump took office early this year. It is estimated that 94 per cent of its staff were let go, with the remaining operations being absorbed by the relevant State Department.

Kenya, as a major beneficiary of aid in key sectors such as health, was affected by the real estate in extension, feeling the heat due to depressed demand from USAID staff and non-governmental organisations (NGOs) funded by it.

Earlier, data from HassConsult for the first quarter of the year showed that asking prices of properties in leafy suburbs such as Kitisuru and Lavington associated with expatriates recorded a drop.

This trend, however, is expected to change as the UN sets up offices for the United Nations Children’s Fund (Unicef), United Nations Population Fund (UNFPA) and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women), in the city.

Kenya already hosts the UN Headquarters outside of New York that serves the rest of the continent and the global south.

Real estate consultant Knight Frank, in its half-year report – Kenyan Market Update – exudes confidence that the setting up of these three offices will inject the dwindling vibrancy in the high-end market.

“The upcoming establishment of three additional UN headquarters in Nairobi by late 2026 presents a significant demand catalyst, with expectations of a significant number of new expatriates requiring premium housing,” says Knight Frank in the report.

It adds that the jetting in of new expatriates is expected to cause an increase in prices due to demand, listing Kitisuru, Muthaiga and Spring Valley as some of the areas that will witness a huge change in price.

“This anticipated influx may create upward price pressure in the medium term,” says Knight Frank.

“Prime neighbourhoods including Muthaiga, Karen, Kitisuru, Loresho, Spring Valley, and Lavington continue to command premium valuations due to their exclusivity, security, controlled development, and superior accessibility via the Expressway.”

Duty station

Director-General, United Nations Office in Nairobi (UNON), Zainab Bangura, while speaking in February when the news was shared during a meeting with Prime Cabinet Secretary and Foreign and Diaspora Affairs Cabinet Secretary Musalia Mudavadi, noted that Nairobi is the UN’s fastest-growing duty station.

“The Nairobi duty station is the fastest growing duty station in the United Nations, and it is the only duty station progressively recording a steady growth. As we speak, we have 86 UN offices in Kenya, 73 in Gigiri in the capital city, Nairobi. When the Unep (United Nations Environment Programme) was set up, we had only 300 staff; now we are boasting of 6,500 staff, 11,000 families and dependents,” she said in a statement.

In April, HassConsult, a developer, noted how the exit of USAID and consequently expatriates led to a drop in asking prices of units in high-end market areas.

The index published by the developer showed the city’s suburbs recorded their first contraction in asking prices in two years at 0.8 per cent.

Muthaiga contracted by 4.9 per cent, Nyari by 4.7 per cent and Kilimani by 4.6 per cent.

While this drop is associated with the global macro-economic conditions that have spilt into the domestic market, the exit of expatriates was also cited as a cause.

“Locally, in the pricier city suburbs, the fall in asking prices revealed concerns about a fall in demand after the US cut off funding for its USAID programme and its affiliated programmes in Kenya. This action has led to mass layoffs, which affect the target market for the higher-end rental market segment,” said HassConsult in the index.

The Knight Frank report notes that the country’s prime residential market demonstrated stable growth during the first half of 2025, with the sales price index increasing by 5.63 per cent year-on-year to June 2025. This is a slight drop from the 6.58 per cent growth recorded in the comparable 2024 period.

It adds that rental markets showed remarkable consistency, with prime residential rents growing by 7.96 per cent year-on-year to June 2025, nearly matching the 7.98 per cent increase seen in 2024.

“This sustained performance underscores continued demand from high-net-worth individuals and expatriates, particularly for well-priced properties in prime locations,” the report says.

Even so, the report notes that the prime residential market continues to benefit from constrained supply, as developers increasingly focus on the high-density, low- and middle-income segments.

“This scarcity effect has supported price resilience for the prime residential real estate, despite broader economic challenges,” it adds.

The recent removal of preferential tax provisions for expatriate workers through the Finance Act 2025, Knight Frank says, is expected to introduce some affordability pressures, reducing net incomes for this important tenant demographic.

“However, the market has shown notable absorption capacity, with any vacated properties being quickly reoccupied,” it says.