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Insightful take on Nairobi Real Estate
Tusker Baridi
#1 Posted : Monday, May 18, 2009 5:03:00 PM
Rank: Member


Joined: 12/9/2006
Posts: 186
http://www.thegeneration...biHousing%20Market.html

Most Nairobians priced out of the housing market

Nairobi’s real estate market has some really peculiar characteristics. You have banks that want to sell mortgages but sell them at ridiculously high rates; developers who make a kill but meet less that 20% of the housing demand; self-builder’s who are not ready to pay for professional services; a chain of taxes that are passed on to buyers; and land speculators who have driven land prices to ridiculously high levels.



The result is house prices in the formal sector that keep on going up and a market where most Nairobians who put in an honest day at work can only afford to rent although most want to own houses. The formal real estate in Nairobi seems to be only good for developers and land speculators. Even for rental investors,the numbers do not add up.


Does the following make sense to anyone? A typical house in leafy estates such as Lavington,Runda,Karen,and Kitisuru sells for between Ksh. 25 to 50 million. Never mind that in some of these places,there are hardly any roads to talk about. The average income in rent will be between Ksh. 120,000 and 250,000 before paying agents,city council and land rates,and maintenance expenses. An average mortgage of Ksh. 35 million requires monthly repayments of around Ksh. 400,000 and 500,000 for 20yrs,which is more than double the income.


This scenario is repeated across the entire formal housing sector. 3-bedroom units at Langata and South B ask for between Ksh. 5 and 7 million and fetch monthly rent of between Ksh. 25,000 and 40,000 to 45,000 if you are very lucky. The average financing for this requires repayments of about Ksh. 80,000 per month for 20yrs. This is Ksh. 40,000 more that the rent income.


The only areas of real estate that make economic sense are in the informal department of the sector. These are in areas largely outside the existing boundaries of Nairobi but that the metropolitan plan has proposed to integrate. These include the spines of developments along Thika road to Thika; on Mombasa road to Athi River,Ngong and Kiambu e.t.c.


There is largely no development control in these areas and many developments are of very low quality and disasters waiting to happen. In almost all cases,they are rental property as few people in this bracket have sustainable incomes and therefore cannot afford or qualify for mortgages

What other factors have contributed to a formal real estate market which does not make economic sense? During much of the 1990’s very few houses were built. The change of government in 2002 was a goldmine for developers. The banks came up with all kinds of real estate products and easy credit. Although such products were still largely unaffordable by most Nairobians,the few who could afford,plus many in the Diaspora who gained confidence to invest in real estate back home created an instant massive demand.


For an industry that takes time to deliver products into the market,the demand far exceeded supply. It takes over two years to buy land,develop designs and have them approved,and execute a housing project. As a result the prices shot up and got to ridiculously high levels. The few developers who had ongoing projects and those who were ready to go sold their houses at prices that did not follow any real estate economics.


The boom was timely as the densities in Kilimani,Kileleshwa,Lavington had been relaxed to allow higher plot coverage and plot ratios. The hype of owning a house in these formerly exclusive estates meant that the highest demand and housing boom was concentrated in these zones of Nairobi.
When Joseph of Safaricom said Kenyans sometimes exhibit peculiar habits,I think his statement is relevant here - developers and buyers threw commonsense and caution out of the window. Buyers continued buying,largely off paper,and developers overdeveloped the place. Apparently no infrastructure upgrading was taking place but prices continued to increase.


Corruption money from connected locals and profiteering in troubled neighbouring countries also entered into the Nairobi property market. Some continues to flow in from business people who have fled conflict in Somalia,Democratic Republic of Congo and Burundi. Migrants from such countries are willing to pay any rent or prices in the over-priced market to get somewhere to call home.




One would have expected a market correction to happen,but only prices of apartments at Kilimani and Kileleshwa (and some sections of Lavington) dropped,although they remained at levels out of reach to most Nairobians. Recent surveys indicate that speculators are exiting these areas as prices continue to drop - some of them after making much lower profit margins than speculated. In some areas prices have come down by as much as 20%.


Prices began falling from 2006 onwards,as a consequence of over-development in some of these formerly up-market estates; overloading of the infrastructure no upgrading happened. The effects of the post-election violence,surging inflation also squeezed consumer power. It is likely to get worse with the effects of the prolonged global credit crunch as our agricultural products fetch less in global markets and tourist numbers decrease in the coming season.


The good thing is that the price drops have pushed developers into lower-middle areas where a larger proportion of Nairobians can afford but where returns are a lower and developers have shunned for a long time. Massive projects are underway in Athi River and Kiambu.


Surveys indicate that for the 150,000 house units needed per year,only 20% are built and only 20% of those built are in the low income areas. Prices in these areas have continued to rise or remained stagnant.


Analysts now hope prices in the upper markets may stabilise following the slowdown in development.


Worsening inflation and tighter credit will continue to squeeze the purchasing power of most Nairobians leading to lower take up of houses for owner occupation.


House ownership remains very low and the real estate market needs very serious and urgent review. The sustainability of Nairobi’s real estate market in the long term will remain in serious question as long drastic measures are not taken. The situation is already out of hand and needs to be urgently checked.


In general,as long as demand continues to outstrip supply,and the few ‘unique’ buyers remain around,real estate will continue booming but for a very tiny population.


So what is the way forward? The delivery of housing should be a multi-sector affair. Currently it is predominantly in the hands of the private sector developers and needs restructuring to develop price competition between multi-players.

The central and local governments have the tools to enter into housing development,social institutions need to up their delivery and encouragement of social housing needs to happen. A review of urban land ownership laws is urgently needed to reduce speculation and land costs. Institutions such as the NHC should stop following the private sector housing delivery structures and come up with innovative ones.

Nairobian’s should also look to own land,houses and live in other cities and towns to correct the land prices and reduce speculation. Most Nairobians would be living in far higher standards with more fulfilled life in other urban areas across the country than in Nairobi. The government can encourage this by a great deal if it developed infrastructure in the other cities and decentralised services to make these urban areas more attractive.

More innovative credit products should be developed to give the banks and housing finance institutions competition.

More young Nairobians should pool resources to deliver group housing.
Tusker Baridi
#2 Posted : Monday, May 18, 2009 5:11:00 PM
Rank: Member


Joined: 12/9/2006
Posts: 186
I have a feeling that this Nairobi real estate bubble will not end well,just look at Japan,UK,US,Dubai etc. In these places,people believed that houses would appreciate forever since nobody was manufacturing new land(except Dubai).

Plenty of opportunities to tap into middleclass real estate. All one needs is inexpensive but durable material and a cooperative and responsible government.
Obi 1 Kanobi
#3 Posted : Monday, May 18, 2009 6:01:00 PM
Rank: Elder


Joined: 7/23/2008
Posts: 2,964
Good read.

I have always stated previously and will continue to say that the high cost of real estate in Nairobi is primarily caused by transport bottlenecks. As long as the long jams to the city centre persist,we will continue having high priced houses near the city centre and low development outside.

The local government needs to step up. I will not try to burden the councillors with complicated issues that they don't understand,but the new city clerk looks like a polished man who should appreciate the bigger picture. He needs to sought out the transport issues so he can open up the city.

While in Nairobi,I used to move around alot and I was able to notice some stretchs of less than 1KM,but which would cause traffic jams for even longer distances,the obvious culprit is Uhuru Highway,this road needs to have its lanes doubled,Thika Rd. which I recently heard is being expanded,Kiambu rd,Langata road at the Bomas of Kenya junction. And off course we need the bypasses completed.

All the other players are stuck coz of this obvious infrastructural problem Nairobi faces,e.g. even if the banks reduced their interest rates,the sellers of houses would simply increase prices e.t.c.

BTW @TB,good stuff you have posted here.


I guess if you can't win with facts,you can always pen bile-laced,xenophobic rants to distract everyone.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
stocksmaster
#4 Posted : Monday, May 18, 2009 7:38:00 PM
Rank: Member


Joined: 9/26/2006
Posts: 377
Location: CENTRAL PROVINCE
Nice analysis. I had exactly the same argument with my buddys yesterday and your argument mirrows mine.People are buying property(mainly land) for speculative purposes and not utility.As such,the prices have risen to unjustifiable (and hence unsustainable) levels. The diaspora money played a big part in this price rises. With the global recession,job losses will lead to liquidation of some of this real estate,increasing supply & hence price corrections.


Happy hunting








Stocksmaster-For well researched market analysis
Sigiriri
#5 Posted : Tuesday, May 19, 2009 4:43:00 AM
Rank: Member


Joined: 6/26/2008
Posts: 319
I agree with the concerns on this article. Even if prices keep rising,they rise for the same reasons. Wait until the government one day realises nairobi is irredeemable - and move the capital elsewhere,ndio kutakuwa na correction.

The problems of nairobi I feel,can only be fully corrected by moving the capital to a new city - much like Nigeria and their new Abuja city. lagos was simply not redeemable,they created a new city from scratch,in an area not previously dominant in anything at all,just little settlements compared to Lagos. I was there,I know - and @young can support this. Think Nanyuki,Isiolo....Machakos....

Nairobi is a gone case as far as an concerned,am only here because all the companies choose to stick here......for what??


Bidii yangu
Marty
#6 Posted : Tuesday, May 19, 2009 4:51:00 AM
Rank: Veteran


Joined: 3/31/2008
Posts: 761
Location: Nairobi
@TB and others,

The article basically summarizes the issues in Kenya's real estate. However,one point I noted and have exploited in the past is the fact that there is a segment of the market which has largely been ignored by developers. The lower middle class type of houses going for 3-5M is largely unattended. Developers may have realized that demand is concentrated in this segment and this explains the fact that Atrhi River,Kitengela and other outskirts have witnessed some developments that fit this segment. We need to make hay while the sun shines and develop with this segment of the market in mind.

..wise as a serpent,humble as a dove
When I admire the wonder of a sunset or the beauty
of the moon, my soul expands in worship of the Creator.
tony stark
#7 Posted : Tuesday, May 19, 2009 7:02:00 AM
Rank: Veteran


Joined: 7/8/2008
Posts: 792
As a hopeful home owner with little hope in acquiring the house of my dream i have spent some time think about the housing issue.
House prices determined by demand and supply. The demand can not and should not be discouraged but the bottle necks on the supply side are many things that can and should be done.
1. The goverment is a poor player. They supply too little to too few players. The houses they make are not targeted for the masses. NHC and other arms the ministry of housing making less than 500 per year on average. That is nonsense. The goverment should just up its game and build houses infrastructure to accompany the houses etc.
2. Land speculators are a large issue. Yes the constitution give people the right to property but if you own property that you aren't developing and are just hoarding land (that is exactly what these land speculators are doing) to gain 200% profit,well that should be discouraged. The goverment should tax undeveloped land,with higher rates etc etc. This hoarding of land to quadruple profits should stop. What economic sense is there in somebody buying land say in syokimau 4 years ago and is now selling the land more than 10 times the price he bought it. No development or value addition done.
3. If the goverment did its part the private developers would also up there game. They would look at more innovative ways to price houses and also build more reasonable housing.
4.Opening up Nairobi is good news. Athi river,thika etc should have more infrastructure development and the basics of roads,sewers,lighting and most importantly ZONING should be done. The development in these areas are haphazard at best! At the rate developments are going on these areas will be concrete slums.
5. We need more innovative materals and building technologies to make buildings cheaper in kenya. These revision of the building code is long overdue.

So what little change im i trying. I'm following suit currently hoarding land with a group of other young men in the coast. Considering building units for sale on a 1/2 acre 3nd row from the beach.... but hoarding is also an alternative!!

SK A.L.U.M.N.I (Alcoholic Liason and Undergarments Manager of Nakedness Internationally)
Marty
#8 Posted : Tuesday, May 19, 2009 7:14:00 AM
Rank: Veteran


Joined: 3/31/2008
Posts: 761
Location: Nairobi
@tony

U raise some serious issues that need addressing. The proposed land policy had attempted to address the issue of hoarding land. However,govt goodwill is needed to implement the policy,but what is the govt doing?,has the proposed land reforms identified in agenda 4 been addressed?

I also have a big problem with non controlled developments springing up even in areas where u never thot this could happen ( think Karen,Lavington,etc). Why does NCC allow such developments? And have u realized that due to failure on the part of govt,residents are trying to control development..... we seriously need to relook at how things are done in Kenya....and the govt has a lot to do,but the question is......will they do anything. For now some of us are forced to keep speculating and subdividing land for sale as there is money to be made.....if u can't beat them,join them.

..wise as a serpent,humble as a dove
When I admire the wonder of a sunset or the beauty
of the moon, my soul expands in worship of the Creator.
Ric dees
#9 Posted : Tuesday, May 19, 2009 10:00:00 AM
Rank: Member


Joined: 3/6/2008
Posts: 632


Good read TB ...True transport and decentralising of services are but a myraid of factors that ail our Real estate industry. I think one of the formost things is that the government needs to step in and regulate the industry and most importantly offer solutions and opportunities for people to own homes. SA has a very good system of subsidies from the government in acquiring property and properties in Sandton are going for around $50,000 which is in a high end neighbourhood. I like the principle of shared ownership and have been toying with it,very common here in the UK this is where you can own 20 - 30-40% of property and the rest owned by a totally different person/s.





Heart is what separates the good from the great - Micheal Jordan.

The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic.
FundamentAli
#10 Posted : Tuesday, May 19, 2009 11:56:00 AM
Rank: Veteran


Joined: 11/4/2008
Posts: 1,265
Location: Nairobi
@ Obi 1

You seem to be describing my situation. I am comfortable where I live. Good compound,plenty of water and a good neighbhourhood. However,my office is on the other end of town. Am serious looking for another house to buy near my office to cut this one and half ordeal I have to endure every morning cutting through traffic. I used to take 25 minutes max some six year ago. From the look of things I have lost hope on things improving on the road. I have to MOVE!


Fundamentals + Sentiments = Position
young
#11 Posted : Tuesday, May 19, 2009 12:38:00 PM
Rank: Elder


Joined: 6/20/2007
Posts: 1,770
Location: Lagos, Nigeria
Good Piece TB

Interesting contribution Sigiriri. For once I have heard from a Kenyan that knows about the beautiful city of Abuja,the new Nigerian Capital since 1993 built from the scratch.

Everybody only knows about Lagos (and only the associated Chinedu like negative news) where I work and live. with a population of 15 Million people and a far smaller land mass than Nairobi,Lagos is full of islands and water ways,a lot confusion,you can imagine.

My take is if Nairobi property is very expensive why not take a look at Kampala or Dar ? That is what EAC is all about. After all Asante Sana (Swahili) is spoken in all these cities.

Young
Lagos,Nigeria

AFRICAN INVESTOR
The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
smano
#12 Posted : Tuesday, May 19, 2009 1:47:00 PM
Rank: Elder


Joined: 12/13/2006
Posts: 2,589
@TB thanks for this post,insightful it is.

@ stocksmaster your 2nd point is spot on.

I wanted to share something I read in an article by a guy in one of these real estate management companies,it was in a recent edition of Home & Away pullout in the Thursday Standard. He was doing a similar analysis of the reasons why the Nairobi property market behaves thus. He talked about the way diaspora remittances was one of the factors that caused prices to rise significantly and continues to do so even with the current global credit crunch. This is on the basis of currency conversion. He gave an example of a Kenyan in the US spending 145,000 USD to buy a property here when the KES was 62 bob to the USD,comes to around KES 8M. Fast forward to now - same property has appreciated to KES 11M,same Kenyan in the US spends the same 145,000 USD at the current rates of KES 78 to the USD. The argument was basically that the factors are broad and intertwining. While @tonystark is right to observe that diaspora are negatively affacted by the global crunch,the currency conversion puts them in the same situation as 2 - 3 years ago. I found that interesting.

That said,I totally agree that property development on the outskirts of Nairobi,while it may not look very profitable for developers right now,will be all the rave very soon as infrastructure development gets underway. I have a friend who stays in a 2 b-room apartment opp. Windsor for 17,500/-. I can bet that by the time they complete the 5 lanes on Thika road,the same might be going for 25-30k,as it should when you see the size of the rooms. It's depressing staying in a small 1 bedroom for about the same rent simply coz one cannot stand the hustle of traffic on Thika road! Infrastructure development I believe will play a key role in opening up the outskirts,even the yuppies are prepared to go and live in Kitengela in the next 2 - 3 years in it will take 20 - 30 min to fika town. And owning a 3 b- room crib for 3M - 5M in such a place at that time will be ok for most guys - I wouldn't mind. Any developer here to give their views?

smano
BEER IS LIVING PROOF THAT GOD LOVES US AND WANTS US TO BE HAPPY!
fantony
#13 Posted : Tuesday, May 19, 2009 3:23:00 PM
Rank: Member


Joined: 11/6/2006
Posts: 276
1. 16% mortgage expensive????... it's naive to think like that. i just think the writer has never borrowed a facility inside Kenyan borders.
2. Majority of nairobi residents can't afford housing; so what..? As a developer you are a businessman first and there is a huge difference between a need and a want,the latter group can afford?
As a developer you develop for whichever group will work out a better return for you in a shorter period.
3. Whining will not help. ohh...its so expensive...ohhh.... drugieeeesss and foreigners are driving prices up. Are all those in Lavington,Kyuna,Spring Valley,Thigiri,Gigiri,Nyari,Kitisuru,Loresho,Muthaiga are druglords and somali refugees?
Wake up and smell the coffee! Hard work pays... with a house in a high class neighbourhood,and that when you are over forty; not when you are at your entry level job.
Drop you village standards? Make a decision to what lifestyle you want to lead.
And have a critical look at those who have made it!
Peter Kenneth on Churchill Live described an accurate arc they followed...started at eastlands,then nairobi west/southb/c/langata and finally to the nice list above.
Stop whining for heaven's sake you are making sk appear a losers paradise.
4. stop viewing your world with your special brand of lenses! which prices fell? where?
Obi 1 Kanobi
#14 Posted : Tuesday, May 19, 2009 4:39:00 PM
Rank: Elder


Joined: 7/23/2008
Posts: 2,964
@Fantony,you missed the point by a mile. Do not look at the write-up as an individual problem,look at it as a societal problem,ever heard of micro & Macro issues. They go hand in hand.

1. 16% mortgage expensive????... it's naive to think like that. i just think the writer has never borrowed a facility inside Kenyan borders.

16% is high,ever thought of what the rates are in most developed countries in the world? check the rates for Japan,SA,UK,US etc,then tell us if you are happy to pay the kenyan rates.


2. Majority of nairobi residents can't afford housing; so what..? As a developer you are a businessman first and there is a huge difference between a need and a want,the latter group can afford?

Case in point; at one point mobile phones were sold for 200K and people were charged to receive calls,enter MJ and now housegals own mobile phones and the businessman Safaricom is making mad cash.


3. Whining will not help. ohh...its so expensive...ohhh.... drugieeeesss and foreigners are driving prices up. Are all those in Lavington,Kyuna,Spring Valley,Thigiri,Gigiri,Nyari,Kitisuru,Loresho,Muthaiga are druglords and somali refugees?

Nobody is whinging,we just want the central and local governments to provide some order,its their job. Most countries restrict the activities of non citizens,e.g TZ and the current EAC impasse.

Wake up and smell the coffee! Hard work pays... with a house in a high class neighbourhood,and that when you are over forty; not when you are at your entry level job.
Drop you village standards? Make a decision to what lifestyle you want to lead.
And have a critical look at those who have made it!
Peter Kenneth on Churchill Live described an accurate arc they followed...started at eastlands,then nairobi west/southb/c/langata and finally to the nice list above.
Stop whining for heaven's sake you are making sk appear a losers paradise.

I would like to see you tell a watchman who works 12 hours everyday that hardwork pays so he should keep his eye on the 12m mortgage. Though smart and hard work does pay. There are very many kenyans who work hard e.g Teachers etc. they cannot buy houses in the competitive Nairobi mortgage but I know for a fact that there is an estate in Nakuru called Teachers with very decent houses and was constructed through teachers sacco loan schemes. Its not all about the amount of money,some smarts and collective organisation in society also helps.



4. stop viewing your world with your special brand of lenses! which prices fell? where?

Whats wrong with looking for discounts,its called smart shopping.


I guess if you can't win with facts,you can always pen bile-laced,xenophobic rants to distract everyone.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
tony stark
#15 Posted : Tuesday, May 19, 2009 4:54:00 PM
Rank: Veteran


Joined: 7/8/2008
Posts: 792
@ Fantony your condescending attitude and tone is not warranted.

'16% mortgage expensive????... it's naive to think like that' Well in this case i believe you are being naive. Average mortgage rates in the UK range from 4-6% and this is repeated in most of the developed world. The default rate as seen by the credit crunch is higher there than it is in kenya. So how do you justify 16% mortgage!
'Majority of nairobi residents can't afford housing; so what' Don't be naive. The goverment has a responsibility to house it citizens in decent housing. If you think housing is only for the rich kweli tunashida. The next civil strife will be a class issue to! The private developers have a right to make a profit but isn't it greedy to expect to double your money!! But that is there prerogative and no one here has said don't make the paper. All we are saying is goverment should also step in and build more houses increasing supply and reducing demand of the developers property.
'Whining will not help. ohh...its so expensive...ohhh.... drugieeeesss and foreigners are driving prices up' Kizungu ni ngumu sana. Who here has whined!!

Please save your marget wanjiru evangelical wealth preaching on 'decide on the life you want' nonsence and either add to the constructive discussion that we were having or keep quite.

Back to the discussion
@smano.I hadnt commented on the diaspora. I cant get the point you are making. Nway as much as the diaspora is negatively affected i dont think that will bring down prices. The rate of there investment might dwindle which i doubt because speculation of land in kenya is a better investment vehicle with better return with obvious risks of being conned!
@Mr Tea spot on.
@sigiriri Nairobi has a lot of hope all we need to do is make serious investments and serious choices. And as Mr tea says the metropolis is the solution to nairobi problems.

SK A.L.U.M.N.I (Alcoholic Liason and Undergarments Manager of Nakedness Internationally)
Marty
#16 Posted : Wednesday, May 20, 2009 4:05:00 AM
Rank: Veteran


Joined: 3/31/2008
Posts: 761
Location: Nairobi
From a developer's point of view,I being one of them,though in a small way,all one is interested in is highest returns within the shortest time possible. This explains the reason why in the past,the higher middle class market (6-10M) houses have been a hit in the past,coz there was hype sorrounding the specific locations where such houses could be developed,Kilimani,Lavi and the like. However,this is the segment of the market that has been really affected by the economic downturn.

Developers have not been very keen on the lower end of the market until recently coz it is now obvious that this is the segment that the demand is sustainable in the foreseeable future. It is thus clear that estates are being set up in the outskirts of Nairobi where the demand is sure,though the returns may be relatively lower.

Another important factor to note is that the prices of land in the neighbourhood determines the price of the houses done. Thus a similar house in Kitengela,Ngon'g,Kiambu road and other locations are priced with amazing disparities.

We also have to differentiate demand and effective demand. Demand is quite high but not all those who wish to own houses can afford them. It is thus important to note that effective demand constituted by those who want houses and go for them is what is very important from a developer's point of view. Majority of Kenyans who buy houses through mortgage cannot afford houses beyond the 8-10M price largely due to the very high repayments which are beyond reach for most of them.

..wise as a serpent,humble as a dove
When I admire the wonder of a sunset or the beauty
of the moon, my soul expands in worship of the Creator.
smano
#17 Posted : Wednesday, May 20, 2009 6:54:00 AM
Rank: Elder


Joined: 12/13/2006
Posts: 2,589
@tony stark,sorry,that comment was meant for sigirigiri,he/she's the one who had commented about the diaspora,your 2nd point in the earlier response was spot on. I inadvertently interchanged the two names.

@Fantony,are you a developer? Coz if that's they way most view this issue then we've got a long way to go...sorry...I'VE got a long way to go. @Marty thanks for those insights,refreshing & encouraging

smano
BEER IS LIVING PROOF THAT GOD LOVES US AND WANTS US TO BE HAPPY!
bwenyenye
#18 Posted : Wednesday, May 20, 2009 10:23:00 AM
Rank: Elder


Joined: 5/24/2007
Posts: 1,770
Good people,

My take is that the prices in Nbi may hold for a while longer. These are my reasons


Nairobi was designed as a class capital. There should be a place for everyone.( sadly) The owners of housing in Nbi are the owners of capital in Kenya. They will ensure that Nbi remains as is.e.g when commoners tried to owm land in Karen,they slapped a minimum 5acre per entry that was way above the commoners. What amazed me was that they allowed the dezoning of some areas like Kilimani but the result is there for all to see.. chaos! The beauty of the place is lost and now remains a concrete jungle. I think they will block this through Kisia.
Real estate in nairobi is a not a common good ( in economics) but has grown to become a luxury item. This will be more felt when the EAC comes into play. As you well know,luxury items respond differently to higher prices.
Now onto the outskirts that are being seen as the saviour,it is unfortunate that there is no planning and so what we end up having are concrete slums. e.g Thika road towards ( githurai 44 and 45) is horrible,Mwiki,Huruma,Ruai,Onagata Rongai,Ngong' etc. The only place that could be slavagabe is Msa Rd. This is because along Msa Rd ( upto Mlolongo) there are alot of companies moving there and building premises. These companies,new infratstructure,coupled with Upper hIll area offices will ensure a balanced area where definitley prices will continue to climb. It means that people will live around here and work around this area.

The only other best option would be to develop a new city. But even then,Nairobi will hold its forte.
Do not think inside the box. Neither think outside the box. You should remove the box and think free!!!! Peter Kenneth
nimimi
#19 Posted : Wednesday, May 20, 2009 2:24:00 PM
Rank: Member


Joined: 5/10/2007
Posts: 28
Firstly,I must commend you all for very insightful analysis on the issue. I have some small developments in the lower middle income space and I must say that an interesting turn of events that has occured in recent times is that rents in Athi River and Kitengela (2 b/room flats) have over taken rents in Tena. Now in terms of future development (from a developers perspective) I can only imagine that many of us have no choice but to follow the cheese thus expect more expansion past mlolongo...unless someone can tell me why this trend in rents has occured...
Chaka
#20 Posted : Wednesday, May 20, 2009 3:42:00 PM
Rank: Veteran


Joined: 2/16/2007
Posts: 2,009
@TB,

Very good.This is the reality on the ground.

I once had a plot (with intention of bulding)at Ongata Rongai and had hoped the the Langata dual carriageway would end at the Bomas turnoff.This did not happen,then there were vicious gangs killing people there i.e insecurity,no water,no sewer lines(the whole place reeked of sh.t),uncontrolled development.I gave up and sold it.

Now can someone tell me why it is that in Japan they have 100 year mortgages?

Why despite the number of property owners having gone up over the years the government cannot reduce stamp duty from the current 4 per cent?

Why can't the government reduce construction costs by removing VAT on hardware materials?

I also find the land rates paid to NCC in Nairobi quite high

Another problem is that when you apply for a refund from KRA for mortgage interest payment in the tax returns,they don't pay up!
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