AirBnB: Nairobi vs Kampala

There is an oddity to the tale of Nairobi’s real estate sector. Despite being the largest city in East Africa and a tourist hub, Nairobi trails Kampala in AirBnB occupancy rate. Statistics obtained from AirDNA, an AirBnB data aggregator, shows Nairobi’s occupancy rate is at 38 percent while Kampala’s is at 43 percent.

Nairobi has almost triple Kampala’s AirBnB’s listings. The high listing in Nairobi may be driven by the need for faster mortgage repayments — out of 2,817 tracked AirBnBs in Nairobi, 42 percent are entire home rentals. At an average monthly revenue of Kshs 45,000 (avg occupancy x avg dailyrate ), AirBnB makes a better return on investment than putting an apartment up for rental.

Example, a 2 bedroom apartment in Syokimau sells at Kshs 5 million. On a 25-year mortgage, the monthly repayment amount would be estimated at Kshs 49,000. On a rental scheme, the owner is expected to net Kshs 25,000 while on AirBnB the amount can rise to Kshs 45,000 at an occupancy rate of 38 percent.

(statistics on Nairobi AirBnB activity courtesy of AirDNA)


San Francisco, which has the highest rent prices in the world, also has the highest AirBnB occupancy rate at 86 percent. A working theory on the high occupancy rate in San Francisco is that rent prices are pushing more people to put up their houses on AirBnB. About 60 percent of AirBnBs in San Francisco are entire home rentals — a metric that can be used to indicate people who buy houses and put them up on AirBnB (for faster mortgage payment), and move across the harbour to Oakland City to rent. The high occupancy rate is further compounded by few apartments on AirBnB — 7,813 units compared to Paris with 43,539 units. Nonetheless, the is a strong correlation between rent prices and AirBnB occupancy rates as shown below.

(Rent price from Numbeo on a 3 bedroom house close to city centres — 12 cities used)

Upscale Nairobi

Upscale neighbourhoods in Nairobi experience the same effect as major cities. High rent prices push owners to find creative ways of paying rent or mortgage. The occupancy rate is driven by convenience, security, amenities, prestige and aesthetics. According to the Kenya National Bureau of Statistics’ Economic Survey of 2017, the hotel occupancy rate in the country stood at 30 percent in 2016. This is 8 percentage points lower than AirBnB and the margin widens if we only consider upscale neighbourhoods.

Back to Kampala

If rental prices are an indicator of occupancy rate, then Kampala is a great use case. A Cytonn Investment report released on 25th September 2017 titled‘Kampala Real Estate Investment Opportunity’ puts rental yields in Kampala ahead of Nairobi. Rent prices have been appreciating faster than Nairobi in all categories (office, retail, and residential). The residential yield stands at 6.8 percent in Kampala and 5.6 in Nairobi, a difference of 1.2 percentage points.

If you live in Kampala put your apartment on AirBnB — it’s worth it.


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