Nairobi rent up 10 per cent as 15 per cent of homes shift to Airbnbs

A growing shift of housing units into short-term rentals has pushed rent prices higher in Nairobi, straining tenants already grappling with falling real wages and rising living costs.

New data by real estate consultancy Knight Frank shows that at least 15 per cent of homes in Nairobi’s middle- and high-end estates have been converted into Airbnbs, contributing to a 10 per cent rent increase over two years.

This transformation of long-term housing into short-stay units has made it harder for residents to afford homes in a market where salaries are not keeping up with inflation.

“About 15 per cent of Nairobi’s housing units have shifted to short-term rentals, driving a 10 per cent rent increase over two years as the city’s residents are now competing with this new demand,” Knight Frank says in its latest report.

The report, which reviewed the rental market up to the end of 2023, notes that the trend has continued beyond the two-year window, even though updated figures were not included.

What started as a convenient platform for travellers to find temporary accommodation has turned into a booming market for landlords looking to earn more from their properties.

Airbnb, which began as a platform for holiday stays, is now expanding into services like chef-cooked meals and personal wellness sessions.

The company recently introduced a new design aimed at making these services easier to book, part of a strategy expected to earn it more than Sh129 billion in the next few years.

Locally, the impact of this shift is being felt beyond Nairobi. Knight Frank says the move to short-stay rentals is spreading fast to other towns like Nakuru, Mombasa and Kisumu, areas that benefit from both domestic and international tourism.

A short-term rental operator in Nakuru said the rent increase in that town had exceeded Nairobi’s, with units at Runana Apartments rising from Sh30,000 to Sh37,000 since last year.

All 40 units in the development are now being used as short-term rentals, with nightly charges averaging Sh6,000.

This conversion is further squeezing long-term renters who are also battling stagnant or declining wages.

According to the Kenya National Bureau of Statistics (KNBS), inflation-adjusted pay declined by 0.3 per cent last year. The drop marked the fifth year in a row that real wages have fallen, with a sharper decline of 4.1 per cent reported in 2023. The average inflation-adjusted monthly income dropped from Sh62,256 in 2020 to Sh55,451 by the end of 2024, an erosion of Sh6,805.

The wage stagnation comes amid a slowdown in economic growth linked to floods, high interest rates, and political protests over the Finance Bill, all of which disrupted economic activity and job markets.

Knight Frank warns that the rapid expansion of Airbnbs presents a policy dilemma: how to encourage investment without worsening the housing crisis.

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“Policymakers face a delicate task: harnessing the economic benefits of short-term rentals without deepening the housing crisis,” the firm notes.

Despite its growing popularity, the Airbnb market in Nairobi carries some risk. Airbtics, a data company that tracks Airbnb activity, reported that the average unit was booked for 168 nights over the past year, translating to a median occupancy rate of 46 per cent.

“A 46 per cent median occupancy rate is considered a risky market to do an Airbnb. A few hosts are making a good income, but you may struggle to get year-round bookings,” the firm said.

Dunford adds that the pace of converting homes to Airbnbs is likely to slow down as families become more uncomfortable living in neighbourhoods with frequent guest turnover.