Airbnb Popularity Forces Nairobi Tenants to Compete With Tourists for Homes

(NAIROBI) – A rising shift towards short term rentals such as Airbnb has triggered a 10 percent increase in rental prices in Nairobi’s mid and high income estates over the past two years, according to real estate consultancy Knight Frank. The shift driven by demand from both local and international travellers is making long term housing less affordable for ordinary residents whose salaries have remained largely unchanged.

Knight Frank estimates that around 15 percent of housing units in Nairobi have now been converted into short term rentals. These units, now listed on platforms like Airbnb, are reducing the supply of homes available for long term tenants, increasing competition and driving up rental prices.

Airbnb allows property owners to rent out their homes or rooms to short stay guests. While this offers landlords and investors a new source of income, the growing preference for short stays is pushing rents higher in a city where wages have not kept pace with inflation for five consecutive years.

“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,” Knight Frank stated in its latest report. “Policymakers face a delicate task of harnessing the economic benefits of short term rentals without deepening the housing crisis.”

Knight Frank’s report covers the period to the end of 2023. While it confirms that the upward trend continued into 2024, no updated data was provided.

The company Airbnb has also expanded its services to include bookings for private chefs, spa services, personal training and other lifestyle offerings. The firm recently redesigned its platform to make these additional services more accessible and aims to generate over USD 1 billion (approx. KSh 129 billion / SSP 5.9 trillion) from these offerings within the next three to five years.

Knight Frank CEO Mark Dunford explained that many landlords now prefer short term rentals due to the potential for higher returns, even if the property remains vacant for some nights. “It depends on the landlord’s risk appetite,” he said.

The trend is also evident in other Kenyan cities such as Mombasa, Kisumu and Nakuru. A property operator in Nakuru noted a 23 percent increase in rental prices within one year, driven by the shift to short stay tenants. For instance, two bedroom units at Runana Apartments rose from KSh 30,000 (USD 232 / SSP 1.08 million) to KSh 37,000 (USD 286 / SSP 1.33 million). These units are now fully occupied as short term rentals charging about KSh 6,000 (USD 46 / SSP 213,000) per night.

The growing Airbnb market is not unique to Kenya. Other African cities such as Cape Town and Lagos are facing similar challenges as property owners rush to benefit from tourism while ordinary renters struggle to keep up.

This comes as Kenya’s wage growth remains slow. According to the Kenya National Bureau of Statistics (KNBS), inflation adjusted wages fell 0.3 percent in 2024, continuing a five year trend of declining real incomes.

In 2023, workers experienced a sharper decline of 4.1 percent in real income. The average monthly real pay dropped from KSh 62,256 (USD 480 / SSP 2.2 million) in 2020 to KSh 55,451 (USD 428 / SSP 1.99 million) in 2024, a loss of KSh 6,805 (USD 52 / SSP 237,000).

The economic slowdown was worsened by floods that damaged crops, expensive bank loans and political protests against the Finance Bill. These pressures further eroded household purchasing power.

Airbtics, a data analytics firm focusing on Airbnb markets, revealed that a typical short term rental in Nairobi was booked for 168 nights per year. This represents a median occupancy rate of 46 percent, considered risky by industry standards.

“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,” the company said.

Dunford added that the Airbnb trend could level off in coming years as more families become uncomfortable living in shared estates alongside short term guests.

The impact of these housing market shifts, already affecting renters in Kenyan cities, could also serve as a useful observation point for South Sudan, where urban housing demand is rising in places like Juba and Wau due to population growth and internal displacement. With many young South Sudanese professionals relocating to urban areas, rising rents linked to tourism and short stay business models may be a trend to watch.

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