A surge in demand for short-term rentals like Airbnb has sparked a 10 percent rally in rents in Nairobi’s mid- and high-end estates, making leasing homes costlier in an environment where salaries have remained stagnant.
Knight Frank, a global real estate consultancy, notes that an estimated 15 percent of housing units in the estates have shifted to Airbnb, reflecting the growing use of the home-renting sites.
Airbnb has shaken up the market for travel accommodation, competing with hotels by allowing people to rent out their homes or apartments, either in full or as part of a house-share.
While providing investors with a new way to earn money from real estate, Airbnb is a boon to landlords and a bane to workers whose salaries rise in 2024 lagged behind inflation or cost of living measure for the fifth year in a row, weakening workers’ purchasing power and their standards of living.
“About 15 percent of Nairobi’s housing units have shifted to short-term rentals, driving a 10 percent rent increase over two years as the city’s residents are now competing with this new demand,” said Knight Frank in a report. “Policymakers face a delicate task: harnessing the economic benefits of short-term rentals without deepening the housing crisis.”
The Knight Frank report captures the two years to 2023 and executives at the real estate consultancy say the rise continued last year without providing data on the rents.
Airbnb, in addition to finding a place for travellers to sleep, seeks to be the go-to source for chef-cooked meals, spa treatments, hair appointments and personal training services.
The company that took short-term rentals mainstream in May unveiled a major redesign that would make it easier for users to book other services, which it hopes will earn it over a billion dollars (Sh129 billion) in three to five years.
“There are landlords who believe they can get higher rent return from the short-term stay than long-term occupancy and are willing to take the risk of the house being empty for some periods; so it’s dependent on the landlord’s risk appetite,” Knight Frank’s chief executive, Mark Dunford, said in an interview with the Business Daily.
The trend has picked up in other Kenyan cities such as Nakuru, Kisumu and Mombasa, which enjoy local and international tourism.
One of the short-term rental operators in Nakuru said the rent increases in the Rift Valley town were higher than 10 percent, driven by demand. He cited two-bedroom houses at Runana Apartments in Nakuru that were being rented at Sh37,000, up from Sh30,000 when the units were put to market last year.
This represents a 23 percent increase, which the source said operators of the short-stay business can readily absorb.
The 40 units are now fully occupied by short-term rentals that charge an average of Sh6,000 a night.
Other African cities such as Cape Town and Lagos are also experiencing a surge in the short-term rental market, sparking concerns of deepening the housing crisis on the continent.
The rise in rents comes amid stagnant pay in Kenya. Inflation-adjusted real wages in Kenya continued to drop after recording a decline of 0.3 percent last year, says the Kenya National Bureau of Statistics (KNBS), as employers remain reluctant to offer bigger pay rises to cover for rising cost of commodities.
This is the fifth year in a row that workers have endured falling real wages, including a negative 4.1 percent in 2023.
The renewed squeeze on Kenyans’ living standards came in a year when the economy grew at the slowest pace since the Covid-19 pandemic, hobbled by floods that damaged crops, costly bank loans and disruptions that followed anti-government protests against the Finance Bill.
The average monthly real pay fell from Sh62,256 in 2020 to Sh55,451 last year on real terms, translating to an erosion of Sh6,805.
Mr Dunford said the conversion of homes to Airbnbs looks set to flatten in the coming years as families become jittery about sharing estates with short-term rentals.
Airbtics, a data analytics company specialising in the use of the Airbnb platform, said a typical short-term rental in Nairobi was booked for 168 nights per year, generating a medium Airbnb occupancy rate of 46 percent in the 12 months ended May 2025.
“A 46 percent 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,” said Airbtics.
