Kenya’s new property kings

• Influx of questionable foreign cash distorts real estate market and threatens to push ordinary
  people out of the housing sector
• Money from abroad and Somalia shakes real estate sector, especially in Nairobi

Money from Kenyans living abroad and war profiteering in the region has flooded into the Kenyan property market, leading to a doubling of prices for land and houses and steep increases in rents, real estate experts say.

They attribute this trend in part to demand by non-Kenyans, most of them from war-torn Somalia.

The areas most affected are Nairobi, Mombasa and other major urban centres where the price of land has more than doubled as property is sold long before it is ready for occupation.

And the increase in prices has not only affected upmarket areas but low and middle-income residential neighbourhoods as well.

Findings by the Sunday Nation follow investigations by international security agencies that have discovered that millions of dollars reaped from piracy along the Somali coast and drug trafficking are finding their way into Kenya and other parts of the world through an intricate money-laundering scheme masterminded by international criminal syndicates.

The money-laundering, which also involves proceeds from tax evasion, has focused the attention of international security agencies on Kenya, which is being seen as a regional hub for the illicit activities.

Areas of Nairobi most affected by the rise in property prices include Karen where the cost of an acre of land has jumped from about Sh5 million three to five years ago to at least Sh15 million today.

At Kilimani, an acre of land now goes for a staggering Sh70 million, with property valuers and conveyancing lawyers warning that the situation could get out of hand unless checked.

At Parklands, an eighth of an acre sells for Sh50 million, while at nearby Eastleigh, a similar piece is going for between Sh20 million and Sh25 million.

Rents have also skyrocketed. In congested Eastleigh a two-bedroom flat that went for Sh10,000 two years ago is renting for Sh25,000 a month today.

At Nairobi West, a three-bedroom house was renting for Sh25,000 two years ago; today the rent is between Sh30,000 and Sh38,000.

Real estate experts and lawyers say that much of the money that has flooded into the market comes from Kenyans, including Kenyan Somalis, living outside the country.

And some comes from businesspeople who have fled conflict in Somalia, the Democratic Republic of Congo and Burundi.

Many properties in upmarket Nairobi areas including Karen, Upper Hill, Kilimani, Lavington, Westlands and Parklands have changed hands at prices that in the recent past would have been considered outlandish.

Investigations by the Sunday Nation have established that the cost of 10 acres at Karen, which had been put on the market for at least Sh4.5 million an acre, was recently raised to Sh6.5 million when a Somali national made inquiries.