108 Riverside: what the UN Blue Zone is actually worth to an owner

A three bedroom at 108 Riverside runs to 154 square metres and lets unfurnished at KES 160,000 a month. Furnished, the same apartment is advertised between KES 250,000 and KES 330,000. The usual explanation is the furniture. The real explanation is a line on a security map.

What the building actually is

Sixty apartments over twelve floors on three quarters of an acre on Riverside Lane West, complete and occupied. Two bedrooms with master en suite at 106 square metres and three bedrooms at 154, some with a detached staff quarter. Inbuilt wardrobes throughout, open plan kitchens with high cabinets, separate utility areas, balconies, and green outlooks over mature trees or the central garden.

Shared facilities are a swimming pool, a fully equipped gym, a children’s play area, a central garden, ample parking, high speed lifts, CCTV and intercom with security around the clock, a borehole and a backup generator.

Sixty units across twelve floors is a deliberately low density for a Nairobi tower, and it is part of what this building sells. Where a 270 unit development puts forty identical apartments on the letting market in the same quarter, a sixty unit building almost never has more than a handful available at once. That scarcity is worth real money to an owner and it is rarely mentioned in the marketing.

What does an apartment at 108 Riverside rent for?

Unfurnished, the three bedroom at 154 square metres is quoted at KES 160,000 a month. Furnished, the building’s rate card runs a one bedroom at KES 200,000 a month or KES 10,000 a night, a two bedroom at KES 270,000 or KES 13,000 a night, and a three bedroom with two en suite at KES 300,000 or KES 17,000 a night, all excluding electricity.

Individual agents advertise furnished three bedrooms at KES 250,000, 270,000, 280,000 and 330,000. That spread is not noise. The KES 250,000 listing includes the service charge and weekly cleaning and is marked negotiable; the KES 330,000 one is a high specification unit with designer furnishings, two parking spaces and a detached servant quarter. What the rent includes matters as much as the number, and an owner quoting KES 280,000 without saying what it covers is losing to a clearer listing at the same money.

The Blue Zone is the asset

What is the UN Blue Zone and does it matter to an owner?

The Blue Zone is the area within which United Nations staff security rules permit personnel to live. 108 Riverside is inside it, and listings for the building are categorised explicitly as UN approved furnished apartments.

Most buildings compete for tenants who want to live there. This one competes for tenants who are permitted to.

That inverts the usual letting problem. An identical building a kilometre the wrong side of the boundary can match the pool, the generator, the finishes and the rent, and still cannot reach this tenant at all. What you have access to instead is:

• Employer paid housing. The rent is settled against an allowance rather than a salary, which is why KES 280,000 a month is an unremarkable figure here and an impossible one elsewhere
• Posting length tenancies. A two or three year assignment, not a twelve month lease with a nervous renewal
• Furnished from day one. Someone arriving on a posting is not buying a fridge, so an unfurnished unit is invisible to them
• Reliable payment. Institutional tenants with a compliance department behind them are the best covenant available in the Nairobi market
• A shortlist you can get onto. Agencies, missions and relocation firms keep lists of approved furnished stock, and getting your unit onto them is worth more than any portal listing

The surrounding geography reinforces it: embassies and missions all around, Riverside Square within walking distance, Westlands close, and the hospitals and international schools that a relocating family needs. The corridor is described in full in Riverside Drive, the old money corridor.

The furnishing decision, with honest arithmetic

Does furnishing change the yield at 108 Riverside?

Start with the unfurnished case, which is the useful one because here the sale prices and rents reconcile. A three bedroom marketed at KES 22 million to 24 million, let unfurnished at KES 160,000 a month, grosses KES 1.92 million a year. Against KES 23 million that is a gross yield of about 8.3 percent, which is a believable Nairobi number rather than a brochure one. When a different building claims 15 percent, this is what to hold it against.

Now furnish it. At KES 280,000 a month the same apartment grosses about KES 3.36 million a year, roughly 14.6 percent against the same purchase price. The furnishing itself is not trivial, since 154 square metres to the standard these tenants expect is a serious outlay, but at an extra KES 120,000 a month it is recovered in well under two years and everything after that is margin. What that outlay actually comes to is in the cost to furnish a Nairobi apartment.

The nightly question is closer here than in most of Riverside. A three bedroom at KES 17,000 a night against KES 300,000 a month breaks even at about eighteen nights, or 59 percent occupancy, before costs. But platform commission, a full turnover after every departure and short stay management at double the long let fee push the real crossover well above that, and Riverside is a high rate, thin traffic market that punishes an owner who cannot absorb an empty fortnight. For a UN or diplomatic tenant on a two year posting at KES 280,000, the monthly route is almost always the better business. The full comparison is in Riverside as a premium short let market.

What to do if yours is sitting empty

1. Get onto the agency and mission lists. This is the highest value thing an owner here can do and almost nobody does it, because it takes a week of phone calls rather than a portal upload
2. Furnish it. Unfurnished, you are letting a good apartment into the ordinary Riverside market at KES 160,000 and ignoring the only advantage this address has
3. State the inclusions. Service charge, cleaning, internet, generator cover, parking spaces. Four agents advertise this building at four prices and the differences are mostly inclusions
4. Lead with the green outlook and the low density. Sixty units on three quarters of an acre with mature trees is the thing a relocating family responds to, and the listings bury it
5. Price for a long tenancy, not a maximum one. A posting length tenant at KES 270,000 is worth more than a twelve month tenant at KES 300,000 and considerably more than two empty months at KES 330,000

The general diagnosis is in why your Nairobi rental keeps going vacant, and how to set the figure is in pricing a Nairobi rental.

If you are looking to rent here

108 Riverside is one of the better furnished options in the Blue Zone, and the low density is the reason rather than the amenity list. Sixty apartments over twelve floors with a central garden is a quieter place to live than a tower of several hundred, and the mature trees around Riverside Lane West are not a marketing flourish.

Two things to settle before signing. Ask exactly what the rent includes, because furnished units in this building are advertised anywhere from KES 250,000 to KES 330,000 and some include the service charge and weekly cleaning while others exclude both along with electricity. And ask for the floor and the aspect, since a balcony over the garden and a balcony over the car park are let at similar money. If you want us to tell you what is genuinely available, find a home is where to start.

How Goldstay handles it

We manage long lets and short stays on Riverside Drive, including in this building, and we sold nothing here, so there is no sales projection of ours to defend. We charge 10 percent of rent collected on a long let and 20 percent of revenue on a short stay, with no setup fee and no exit fee. At 108 Riverside the advice is usually to furnish and let monthly to an institutional tenant, which earns us the smaller of our two fees, and we would rather tell you that than furnish a flat for a nightly market this address does not need.

If your apartment is empty, send it to us with the floor and the layout and we will come back with an achievable rate and a straight view on the route. What long term management and Airbnb management each cover is set out in full.

Related reading: Winchester Gardens, further along Riverside Drive, Riverside One Residency and furnished or unfurnished.