‘Niko na ka quarter mahali…” is a common conversation starter in many social gatherings. This is so common that a person mentioning a ‘ka-quarter’ will be quickly understood by anyone around them to be talking about a piece of land. In any social gathering, the question of land or property will at some point crop up. And parents will always pointedly ask their children to build a house. Such is Kenyans fascination with matters land and real estate. This bug has translated to a booming sector. The last decade has seen phenomenal investments in real estate. Projects worth billions of shillings have either been completed or are under construction.
The boom has not escaped the notice of international players who have found the country to be ideal for their investments. So, which are some which are some of the best areas to b e looking at? Home & Away takes a look at the most preferred hotspots for real estate developers with an eye on mid level to lower segments of the market.
Nairobi’s satellite towns in recent years have stolen the thunder as far as real estate investments are concerned. These include Kitengela, Kiserian, Athi River, Juja and Kangundo Road. Land availability and reasonable prices in these locations – commonly referred to as Nairobi’s bedrooms – are key drivers for developers looking to cash in on the growing middle class. According to HassConsult’s land price index for the first quarter of this year, an investor is better off banking on land in these locations as opposed to stocks, bonds or treasury bills. For example, a person who bought an acre of land in 2007 for a million shillings in these areas would have seen his investment rise to Sh6.4 million by beginning of this year. A similar investment would have earned him less than a million shillings through the bond market in the same period. What if he had put the money in a savings account? He would have earned a partly Sh140,000 in eight years.
In a recent interview, Francis Kihanya of Manyatta Investments International, a company that handles Diaspora investments says the drive towards satellite towns is unstoppable as long as land prices within the city continue on their upward trajectory. “Recently, we have seen more than 60 per cent of Diaspora investments on real estate going to satellite towns. Most of these people are investing in land for the future and not necessarily for current construction needs,” he told Home & Away.
According to Pete Muraya, CEO of Suraya Property group, any high land costs in the city will have to be passed on to prospective home buyers hence the reason to build in the city environs. “It is easier to buy an eighth of an acre in the outskirts and build several rental houses that building similar homes say in Githurai where there is a lot of county control,” he says. However, he adds that the challenge in these areas is lack of efficient transport system that negates any gains made on home purchase or construction. “You cannot build homes with the notion that everyone will be driving to work. The masses still rely on buses and matatus that may not be so reliable.
The much talked about light rail mode of transport will be a game changer in satellite towns,” he says. Nanyuki-Isiolo Laikipia plains have been termed as the ‘millionaire’s playground’ for a good reason. It is here that remnants of Kenya’s white settlers have dictated the lifestyle in Nanyuki and its environs for a long time. Recently, the area has seen an influx of real estate developers who, just like those in Naivasha are attracted by the area’s natural attractions.
Mount Kenya, the Aberdares and Loldaiga Hills loom large over the region. Also, Laikipia has the highest concentration of big game after the Tsavo ecosystem with large conservancies such as Ol Pejeta, El Karama, Borana, and Lewa defining land use here. Add to these the mild weather and you have a perfect recipe for serious real estate development. Mount Kenya Holiday Homes near Naro Moru and Mount Kenya Wildlife Estate on the eastern corner of Ol Pejeta conservancy are among the big projects that have broken ground here. Towards Isiolo, however, land is still available and cheaper for development.
Big government projects including a resort city and an international airport are meant to prop the area as the ultimate real estate destination. The planned Isiolo Resort City is seeing a spike in land prices, as is the advanced construction of the Isiolo Airport. In 2011, Isiolo saw land prices surge in anticipation of the proposed government projects under the country’s development blueprint, Vision 2030. Back then, a local daily said speculation had made an acre of land in Isiolo jump from Sh15,000 to Sh150,000, this is even higher today. Today, land close to the town has gone even higher with areas like Kulamawe, County Council, Kambi ya Juu, Kiwanja ya Ndege, Bulla Pesa and around the Isiolo Hospital and attracting more residential developments.
A 50 by 100 feet plot in such areas is going for at least Sh500,000. Construction of 501-kilometre Isiolo-Moyale highway, which links Kenya to Ethiopia is ongoing with a railway line linking the area to the coast included in the mega projects.
Naivasha The Rift Valley region has been attracting high end developers. Naivasha’s scenic landscape, wildlife parks and a lake popular with holidaymakers have put the once dusty town on the global property radar. Postcard developments here include Longonot Gate, Great Rift Valley, Osotua Villas, and Aberdare Hills Golf Resort, which was named as the Best Golf Development in Africa at the 2015 International Property Awards. On the other hand, OLX, the online advertising portal lists more than 300 properties within the greater Naivasha area with prices ranging between Sh95,000 and Sh5 million an acre. However, the most popular locations are those around Lake Naivasha.
They also command higher prices than the outskirts. Lamudi, a Global property portal focusing on emerging markets states that despite the availability of land within Naivasha and its environs, construction of residential homes is yet to take shape. “The availability of land in Naivasha is beyond the development rate of the town. This makes the area a real estate hotspot,” states Lamudi. Investors in middle to lower segments of the market should take the cue and come up with products that resonate with Kenya’s ballooning middle class. Mombasa Back to the cities, it is not only Nairobi that you should be looking at. Despite lying on an island, Mombasa has stamped her authority as a leader in real estate development along the coast.
Apart from the well known, high-end products, the area has a growing appetite for middle and low end developments. For example, Nyali View Park, a cluster of 144 units comprising of two and three bedroom apartments is located near City Mall, Nyali and selling between Sh3 million and Sh10 million in what could be considered a high end location. “The homes are popular with first time home owners and those interested to flip them over for capital gain. The uptake of such low end development is a trend gaining popularity in Mombasa,” says Mwenda Thuranira, CEO of Mombasa-based MySpace Properties. Kisumu The lakeside city too has seen unprecedented development within the last five years.
Like Nairobi, the trend in Kisumu is to move away from the city’s hub to the outskirts. Formerly desolate areas such as Awasi and Kibos have seen developers erecting residential units for owner occupation or rental. And while Milimani was the preferred address a few years ago, the picturesque Riat Hills has lately seen investments in billions of shillings. In 2014, a high profile real estate developer in the name of Coromandele Design embarked on a project to develop 30 Swedish style villas on 8.5 acres with an initial budget of more than a billion shillings.
Rents in Riat range between Sh35,000 to Sh60,000. Gated communities such as Victoria Gardens have the middle class as the intended clientele with prices ranging between Sh9 million to Sh16 million. Elly Ongoma, a director at Eldon Properties and head of sales for Victoria Gardens, says first time home buyers are mostly going for the two bedroom units showing a need to develop for the lower end of the market. “We are kick starting the development of low end homes that will sell between two and three million shillings. What we are calling for is for county governments to provide prerequisite infrastructure so that our targeted end buyers can benefit,” says Ongoma. Like Isiolo, Kisumu is also riding on the recent infrastructure upgrade such as Kisumu airport to international standards.