For the last few months, the Kenyan real estate sector has been on its lowest point, taking the heavy beatings from the bad economy. For landlords, it has come to a point where some are slashing rent with the hope to retain their tenants. For some other landlords, the only way to keep getting that monthly rent is to offer free spaces for a specific duration of time. This allows them to attract new tenants or more than their competitors.

 

A perfect example is the Rosslyn Riviera Mall which offered free spaces for a period of 6 months. Also, the businesses that would occupy the spaces would benefit from a 50% discount on the rent after the end of the 6-month free offer. This offer has come in place barely a year after the mall was opened. After its launch in early 2017, the sh .2.7 billion worth was expected to support an additional 116,000 square feet retail spaces targeting shops, restaurants, entertainment and wellness outlets.

 

The owners of the mall were said to be  targeting the residents of Rosslyn, Muthaiga, Runda, Nyali, Gigiri, and Ruaka

. “We believe that Rosslyn Riviera will be a successful neighbourhood mall because of its location, size, concept, convenience, accessibility and target market,” Knight Frank’s head of marketing Mwihoti M’Mbijjewe said then.

With the coronavirus cases has increased since March 2020, things seem to have gotten worse for the landlords. There was almost no money circulating in the economy. The rate of jobless since the pandemic spiked. This means that most of the people who were fully dependent on their salary for their daily living expenses were really messed. This was then transcripted to the landlords since most of these tenants that were sent home by their employers for the sake of survival could no longer afford their monthly rent charge.

 

Landlords with new buildings are said to be worst affected as these buildings are facing an uphill in attracting new tenants. Partly, high prices have also contributed to the low uptake of newly built apartments. 

 

In a recent report by the property consultancy firm has consult, their house price index showed that the home prices for properties in the satellite towns declined by 50% compared to that of last year. This decline was attributed by the bad economy amid this pandemic period. According to the head of development in the company, landlords are said to have become less demanding especially in locations with an oversupply of units.

 

However, things are expected to change for the better as the country’s economy continues to open.

Real estate investment is a preferred choice for Kenya’s richest individuals who consider land and property as their main investment over other asset classes. A report by Standard Chartered Bank showed that 28 per cent of people preferred investing inland, while 27 per cent preferred property as an investment plan. A Wealth Expectancy Report revealed that Kenyan wealth creators are more likely to fund or start a business than an individual in any other market. 

 

A Wealth Report by property consultancy firm Knight Frank and Stanbic Bank indicated that close to a third of Kenya’s high-net-worth individuals (HNWIs) have apportioned their wealth to properties. The other 20 per cent tied their wealth to personal businesses while other venture options like bonds, equities, precious metals and cash accounted for 18 per cent of their total investments. A study by realtor HassConsult revealed that returns from land over the past decade surpassed other asset classes like government equities and bonds. 

 

The property boom has provided the real estate in Kenya with the highest returns in the real estate sector. The investments in constructions and buying of land have increased the price of land and property to one of the highest in Africa. The property boom was also driven by Kenya’s growing middle class who have been outpriced in owning property in the capital. For instance, the Hass index showed land prices within Kenya’s capital increased to 63.8 per cent since 2017 while satellite towns like Kiambu and Kajiado increased to 89.4 per cent over the same period. Real estate has remained a lucrative business with 24 per cent of the world’s richest individuals putting their money in property. 

Where you know companies like ours will advertise 55 by 100 plots. They are very often in rural parts of Kenya or undeveloped parts of the country where there are no utilities whatsoever. The most you will do is maybe grade the road so that you have accessibility and sink a borehole.

I would advise you to ask yourself this, you know if you are going to buy an eighth of an acre for whatever amount of money whether it is fifty thousand bucks whether its a million shillings or whatever the case may be. What is the real value to you what are you really getting if you are going to? I think if you’re going to buy an eighth of an acre because that’s the size a lot of our customers sometimes ask us about why don’t you sell us an eighth of an acre. Why are you only offering us half acres or one acre and my answer is always the same because it will cost excessively much money for us to service or provide the utilities, to get the proper approvals for the one-eighth of an acre plot? Because you have to change use from agricultural freehold to residential or commercial, leasehold that is a legal process. if someone is purporting to sell you that ask them for proof that if all of the due processes so that you make sure you’re buying something that’s giving you value for your money and something that you’re going to be able to use in the future. For the intended use or for the promise that is being made.

Investigate; ask questions am I really getting value? If you are going to buy land in a Nanyuki for example and it is 50 by 100. Where on a clear day, you can look all the way into Nyeri County and in some cases on very clear days you can see the Samburu hills. What on

Earth going to do with 1/8 of an acre in Nanyuki it has complete utilities. It has roads, it has sewer, it has water, it has power and this is sorted out in advance so that all that is left for you to do is build your house in a controlled manner.

 

Even then, who is my neighbour, are they going to put up a pig farm or a poultry farm? Which again is not supposed to happen if they do it properly and kill my value? If I wanted to retire there is that the kind of environment I really want to retire to. If I am looking for a getaway, for example, do I really want to feel like I am in South C or South B on a weekend that I want to unwind and go off to my property in Nanyuki or Naivasha or any other place?

 

So ask questions to think about what you are doing think about what value you are getting. Interrogate ask for proof do your due diligence. Do not be lazy about it just, because my brother or my neighbour or my workmate did it, does not mean I should.  You need to do it for the right reasons so you know that that would be my take as far as what the ideal size is specifically in regards to 50 by 100-foot plots or 1/8.

Cheap is expensive, you find in most cases, people are buying these plots of land for speculation purposes only. There may come a point where this does not make sense when everyone is holding a plot just for speculation.

Given that there is no official and strategic planning done, the places when developed will probably turn to slums. The places you expect to be a home away from home will be less attractive than the urban areas. At least in town, you can get Morden developments.