Kisumu County had the highest growth in land prices in 2017 according to the Kenya County Land Prices report released recently by HassConsult. Although demand for land in the counties suffered a huge blow as a result of the rate cap law, there were exceptions.
Counties that have initiated major infrastructure projects did not suffer much from the restrictive reactions from the financial sector. The need for industrial, commercial and affordable housing for low-income earners continued to drive investment. In those markets, prices rose by at least 10 per cent.
Outstanding among these were Kisumu and Nakuru counties which have continued to experience and influx of agricultural, commercial and tourism activities.
Despite Kisumu being one of the hostile hot spots during the impactful August elections, the lakeside city retained its strong economic fundamentals, riding out election uncertainty to deliver a 14.05 per cent growth in land price for 2017, and an average of 12.74 per cent for the five years from 2012 to 2017. This was the highest among the counties.
According to the report, the average land prices the average land price for the county increased to Sh. 6.97m per acre from Sh. 3.8m an acre at the end of 2012. The real estate market in Kisumu has been bullish in recent years, riding on the back of increased demand for housing and reasonable land prices.
In addition, devolution has enabled the county and private investors to initiate a number of projects in public infrastructure, hospitality, tourism, housing, retail and commercial sectors. In effect, this has also drawn a number of people seeking to diversify from the capital, Nairobi to seek opportunities in the county.
Notably, the county has also embraced technology in the construction sector by implementing the e-construction permits system which has reduced the time required to get certification for construction from the county authorities.
The report further highlighted that the financing crunch which has endured through 2016 and 2017, affected the land prices more so in the counties where land buyers have since faced hurdles in financing the acquisition of land. This has left a gap between the demand and supply, something which did not support the cause of rising land prices in the counties.
With recent discussions on the matter by leaders from various sectors inclined towards repealing the rates cap law, the report concludes that this could be the key for investors to understand the future direction and scale of growth in land prices.