THE IMPACT OF ENVIRONMENTAL FACTORS ON PROPERTY RENTAL LEVELS

ABSTRACT
The purpose of this study was to determine and rank the environmental factors that have an impact on the rental levels of residential properties by employing the Hedonic Pricing Model. The study also established the relationship between the environmental factors identified and their contribution to the rental levels of the property they have an impact on.
The field study was carried out on the residential properties surrounding the Nairobi City Park using four sampling zones. The zones were; Muthaiga, Ngara, Pangani and Parklands where a sample of thirty residential properties were drawn, four in Muthaiga and six in each of the other zones. The study used stratified random sampling technique to identify the properties whose data were collected using questionnaires. Key informant interviews were also held to identify the factors that were likely to affect the residential property rental levels. The field study was carried out between February and March 2013.
The study found out that Nature Proximity was the highest ranked, able to explain 49.6 per cent of the changes in rental levels. The second ranked was panoramic vistas of the park explaining 10.7 per cent with the rest being insignificant. The correlation analysis indicated that all the environmental variables were negatively correlated with the dwelling house monthly rental levels. The data indicates that the locational factors were given the most emphasis followed by structural factors and lastly the environmental factors of a dwelling house.
The study also ascertained that the people living adjacent to the City Park and the Nairobi fraternity in general, append much interest to the environmental attributes provided by the park. This is justified by the high ranking of some of these factors as illustrated by the findings of the study. Therefore, the preservation of the park and its proper management should be given more attention. More resources should be allocated to the park and more experienced personnel employed to manage it for it to realize its maximum potential in enhancing the adjacent property values instead of being a nuisance and a disutility to the locality which would reduce property rental levels.