The Kenyan real estate market is already gathering momentum from the improved political climate in the country. Foreign and local investors keen on buying land now have to write a bigger cheque following a steady surge in land prices.
Political stability has gained momentum since the country’s top political protagonists shook hands following a long stand-off after last year’s disputed elections. The resulting positive sentiment has revved up demand for land.
Top of the list on the demand side are land buying companies whose business involves buying large parcels of land, subdividing it into eighth-acre portions and selling to individuals. Industry players are of the opinion that demand has grown across the country and not only in major cities and towns.
In most satellite towns surrounding Nairobi, which include Rongai, Kitengela, Syokimau, Athi River, Juja, Ruiru and Ruai, the cost of an eighth of acre has hit $40,000 in urbanised residential areas and $25,000 for more interior locations.
As it turns out the political stability three months after the political truce between President Kenyatta and former Prime Minister Raila Odinga has unlocked a lot of activity in the real estate sector.
“The truce gave people the confidence to buy land and build houses because of the resultant positive political climate,” Antony Kuyo, a consultant at Avent Properties, said Wednesday.
According to Kuyo, property developers have since proceeded to complete projects that had stalled due to election fears and while others are now more interested in building, creating further demand.
“I don’t see any reason to make prices fall. The economy is expected to grow this year by about 6 percent, Saccos are willing to lend money to people investing in land and the government is moving to invest in houses. Coupled with good political environment, prices cannot fall,” he said.
Several upcountry towns currently have prices for an eighth of an acre at about $20,000 with prices being sustained thanks to development and business booms created by county governments. Within most major town centres, the cost of such plots has hit up to $150,000.
Similarly, in most of Nairobi suburb towns, an eighth goes for up to $350,000 driven by the spread of malls and other commercial activities.
“I have been looking for quarter acre to buy in my rural home but the price is prohibitive. Before elections, I was asked to part with $20,000. Right now sellers are asking for $25,000”, recounted Moses Kinyanjui, a resident of Nyeri.
Cytonn, a Nairobi-based investment firm, recently noted in survey that upcountry towns were experiencing faster increase in land prices due to rising demand for commercial and residential properties.
The survey showed an eighth of an acre sold for an average of $20,000 in Nyeri, from less than $10,000 two years ago. Rental yields in Nyeri, Mombasa, Kisumu, and Nakuru stand at between 9.6 percent and 13 percent for commercial properties and 4.1 percent to 6 percent for residential.
President Uhuru Kenyatta’s Big Four Agenda is also expected to be another boost for the real estate sector as the government plans to roll out the first phase of the project in the coming months across the country.
Analysts expect the program will push up land prices. The multibillion program in which the government seeks to build 500,000 units by 2022 will also push up demand for land. The government is in the process of completing the projects designs.