When more means less: How poor designs can cost landlords

In Kenya’s fast-changing real estate market, design is emerging as the invisible hand that separates profitable rentals from money-draining investments.

While location and affordability have long been key selling points, new market data and research show that poorly designed houses—those with dim lighting, poor ventilation, and cramped layouts—are increasingly falling out of favour with tenants.

As Kenya’s fast-growing rental market expands, a costly mistake is unfolding.

Landlords are rushing to build more units on small plots, believing that more houses mean more income.

But experts and data show the opposite: poorly designed, congested buildings are returning less money, facing higher vacancy rates, faster deterioration, and frustrated tenants who prefer fewer, well-designed spaces.

 Across towns like Nairobi, Nyeri, Nakuru, and Kiambu, the dream of quick profits through high-density construction is backfiring.

According to the Cytonn 2024 Market Review, serviced apartments across the Nairobi Metropolitan Area recorded an average occupancy rate of 80.9 per cent in 2023, indicating a vacancy rate of about 19.1 per cent.

This represents an improvement from the 72.2 per cent occupancy rate reported in Cytonn’s 2019 Hospitality Report, later referenced in the firm’s 2020 analysis.

Cytonn attributes these shifts to factors such as economic pressure, oversupply, and the growing importance of product quality—including design, finishes, and livability—as tenants become more selective about where they choose to live.

“Our analysis of the Nairobi Metropolitan Area (NMA) classified towns into four main categories—high-rise residential areas such as Dagoretti and Embakasi, high-end suburbs like Runda and Karen, commercial zones including Westlands and Upper Hill, and satellite towns such as Ruiru and Syokimau,” the report states.

“Overall, land prices in the NMA rose by 4.5 per cent in the financial year 2022/23, up from 3.2 per cent the previous year, driven by population growth, improved land transaction efficiency, affordable housing initiatives, and the rapid infrastructural development of satellite towns.”

According to Rax Company chief designer and architect Morris Kariuki, many landlords still think that squeezing more rooms onto a plot guarantees more rent.

But today’s tenants are informed. They’ll pay extra for good design, natural light, and space. Poor design reduces rent value and increases maintenance costs.  “Some clients come to us asking that we design buildings that fill up their 50-by-100 plots with rental units.

They often insist on maximising every inch of space, telling us that their friends or neighbours have done the same—without realising that overcrowding a plot can compromise both design quality and tenant comfort,” he said.

 Morris added that landlords who prioritise quantity over quality often hurt their own profits in the long run.

He explained that when property owners cram too many units onto small plots, the poor design reduces ventilation, lighting, and overall appeal—factors that drive tenants away.

 “Tenants are willing to pay more for comfort, privacy, and good aesthetics. The type of tenants you attract determines the rent you can charge — you might have fewer units but earn more. For instance, in Kiambu, a two-bedroom across the road can fetch Sh30,000 per month, while another in the same area goes for as low as Sh10,000,” he said.

 A walk through estates such as Githurai, Zimmerman, or Rongai reveals countless buildings stacked wall to wall—windows facing concrete and rooms with no proper ventilation.

These apartments, often built on 40x80 plots with over 30 bedsitters, may seem profitable on paper.

Yet many have empty units and frequent tenant turnover.

The Kenya Bankers Association (KBA) Housing Price Index for the second quarter (Q2) of 2024 showed that luxury homes continued to perform well, with apartments remaining the most popular choice in the market, while middle-income properties struggled.

Overall housing prices rose to 2.3 per cent in the second quarter, up from 2.0 per cent in the first quarter.

However, the sector’s overall growth slowed from 6.6 per cent to 6.0 per cent, and construction activity dipped from a small increase in Q1 to a 2.9 per cent decline in Q2.  In Nyeri town, the story is no different.

Modern two-bedroom units in estates like King’ong’o and Skuta—with open-plan kitchens and balconies—have occupancy rates above 95 per cent, while older, congested flats record vacancy rates approaching 30 per cent.

 Morris added that clients have increasingly unique tastes and preferences, even when searching for rental houses. He observed that the days when tenants only cared about affordable rent are long gone, as modern renters now look for homes that reflect comfort, convenience, and lifestyle value.

 “Today’s tenants are more discerning; they look at the finishing, the layout, natural lighting, and even the availability of parking and green spaces. Most young professionals, for instance, prefer open-plan designs with modern kitchens, good water supply, and reliable internet connectivity, while families often value privacy, safety, and adequate play areas for children,” he said.

Architect Kariuki notes that poor design harms more than profitability—it shortens the building’s lifespan and ruins the developer’s reputation. 

 “Bad ventilation, poor drainage, and low-quality finishes mean landlords repaint and repair every year. A well-designed building, even with fewer units, can serve for decades and attract steady income,” he said.

Architect Morris links poor design to psychological discomfort among tenants. Lack of natural light, narrow corridors, and overcrowded layouts make residents feel trapped.

“Good design isn’t about luxury—it’s about well-being. Tenants want airy spaces, sunlight, and privacy. These small details determine whether your units stay full or half-empty,” he said.

According to KBA, apartments remain the most popular type of housing for buyers, accounting for 44.23 per cent of transactions within the industry.

Although apartments have been dominant for a while, their market share has reduced slightly compared to previous quarters. Maisonettes grew in popularity, accounting for 25.96 per cent of property transactions, while townhouses decreased in popularity by 2.88 per cent. Bungalows maintained their market share with no significant changes.

 “In 2024, Kenya’s luxury real estate bounced back from a repressed season in 2023. 33.7 per cent of property transactions in quarter two of 2024 were in this market segment,” the report states.

 Morris added that this shift is also being driven by younger, tech-savvy tenants—especially Generation Z and young professionals who are willing to pay slightly more for better experiences.

 “People have options. If a house feels dark, congested, or unsafe, they’ll simply move out. Those landlords who invest in design and space enjoy nearly 100 per cent occupancy and fewer complaints,” he said.

 Beyond comfort, design affects long-term financial performance. Developments designed with professional architectural input recorded capital appreciation of 8.7 per cent annually—almost double the 4.5 per cent seen in poorly designed buildings. The reason is simple: market value follows quality.

 Architect Kariuki believes the problem is also rooted in how investors view construction.

 “Some landlords skip professional advice to save on design fees. But poor planning often leads to wasted space, bad drainage, or weak lighting—problems that cost millions to fix later. The small design fee you avoid can end up costing you ten times more in lost rent,” he said.

Property analysts say the most profitable rentals share a few common features—natural light, good air circulation, open spaces, safe parking, and proper waste disposal.

 “A landlord who builds twelve spacious, well-lit units can earn more than one who crams twenty-five bedsitters on the same land,” Kariuki explains.