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Investors Now Rush to Buy Land around Nairobi
Land around Nairobi is definitely the hottest investment in Kenya today. The most sought after areas are on the eastern side of the city, including Athi River and Kitengela, and the northern side including all the land between Nairobi and Thika Town. And on the eastern side, speculators are investing in land all the way down to Sultan Hamud.
In most areas, land is sold in plots of an eighth of an acre which costs some Shs 400,000 (about $5,700). Larger pieces can be bought at multiples of an eighth of an acre. Further away towards Sultan Hamud – lying some 70 kilometers from Nairobi, the government recently bought land at Shs 200,000 an acre, up from about Shs 40,000 an acre. The effect has been to raise the price of land in the area.
Unique buyers are the Chinese and Kenyans based abroad. The Chinese are interested in large tracks of land in excess of Shs 20 million each at Mlolongo.
Reasons for Land Buying Craze
But why is there the craze for land? Some of the factors being cited are:
1. The opening and expansion of credit facilities: After hitting the roof in the 1990 when bank interest rates reached nearly 50 per cent, there was almost nowhere else left for the rates to go but to come down. So down they came, in some cases to below two digit figures.
In addition, the high interest rates promoted competition as Kenyans looked for alternatives. Savings and credit cooperatives, known as saccos, became key players. There is too, a retinue of financial institutions targeting especially the low income groups.
2. High rents and expensive houses: While interest rates were coming down, house rents and prices of ready made house were going up. So much that a house that hitherto cost Shs 400,000 to buy increased to more that Shs 4 million. Naturally, rents went up.
The result was that Kenyans decided to put up their own residential houses. Contractors and builders soon sprung up every where, putting residential houses. Almost every Kenyan you meet today is putting up – or is planning to put up – a residential house. The house that would cost Shs 6 million to buy can cost you Shs 2 million to put up for yourself. Or even much less if you know some short cuts.
And the beauty of building your own house is that as long as you have the walls standing, doors and windows in place, you can “migrate” to your house. A contractor told me most of those nice looking houses are only shells. But the owners aren’t paying high rents any more. Instead they are repaying a cheap sacco loans. And at the same time investing in their own the houses!
3. Growth of towns and cities. A straight case is that of the government planned technology town, Malili e-City near Sultan Hamud which has raised the demand for land to near craze. It’s difficult to meet anyone who isn’t inquiring about land in the area.
4. Improvement of transport systems. This is particularly the case for areas towards Thika town. The Nairobi-Thika Highway is being turned into ultra-modern, multi-lane superhighway. Among the activities the superhighway has influenced is the decision by the Kenyatta University to build what it calls a “City within a City.”
Will the craze wane soon? It’s difficult to predict. I am in fact informed that many Kenyans based abroad and Chinese businessmen are also in the rush for land, meaning the rush is likely to stay on for a while. My advice is: While it lasts, it may be wise to join it, if you can.
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