Dealing in property may soon be the preserve of the wealthy

The price of land has gone up considerably, and might even be considered exorbitant in some areas, especially those with upcoming high-end developments.

While this is a good thing, it also depresses the growth of property, says Kiambu County Deputy Governor Mr Gerald Githinji.

And although the prices have somewhat stabilised, the forces of supply and demand are still in play. Areas where housing and infrastructural developments are taking place have seen considerable increases in the price of land.

“The ‘appetite’ for housing in this county is very high following the opening of the Thika highway, as well as the northern and southern bypasses that pass through Kiambu County, and many investors are rushing there, targeting the many high-end developments due to their high returns,” says Mr Githinji.

The middle-class aggressively seeking investments in real estate is rising significantly, thereby exerting pressure on the property market as demand outstrips supply, especially in urban areas.

The Hass Property Index for the third quarter of 2013 shows that the high cost of property in metropolitan areas like Nairobi, combined with high interest rates, means that most people can only afford to rent houses rather than buy their own or take a mortgage.

With the ambitious projects announced by counties like Machakos, Malindi, Kwale, and Kiambu, investors are likely to flock to those areas, leading to increases in the price land there.

Prices are going up across the country but it is worse in counties such as Nairobi, Mombasa, Nakuru, Eldoret, and Kisumu.

This is a problem mostly in Third World countries, unlike in the West where physical planning is extremely important and land is put to its best use.

In the West, the price of land in residential areas it almost set because one can only put up buildings of certain sizes while strict laws to ensure food production are not interfered with in agricultural areas.

Notably, some counties have taken measures to stem the problem. “Some counties have stopped certain land transactions, making the little land available be in very high demand,” says Mr Kariuki Waweru, author of The ABCs of Real Estate.

For instance, Kajiado has stopped all sale of land, while Kiambu has also stopped the changing agricultural land for other uses.

“This means that those whose land had already conducted a change of user will sell it at a higher price,” says Kariuki.

MANY OFFERS
Mr Githinji says the Kiambu County Government is receiving many offers from people who want to convert their coffee farms into real estate developments, but it will now be very difficult to do so.

“We need to find ways of creating areas specifically for housing, industrial and business developments and areas for agricultural development, where people can produce and add value to agricultural produce that can be exported to Europe and other countries,” he says.

“We are trying to ensure that we maintain our agricultural heritage for food security because if we use up all agricultural land for housing, our country will be food-insecure.

Mr Githinji says he participated in a United Nations meeting on how to create sustainable cities, “and what I realised was that if we continue to develop the way we are in Kiambu, we would be creating shanties”.

“If all areas next to the Thika Highway became horizontally populated with different types of housing,” he says, “they would create shanties even if some of the houses are built by brick and mortar.”

Kiambu, therefore, is in the process of creating a special plan for proper zoning, which will extend to developments on the Thika Highway.

By doing so, the county hopes to end the current trend where anyone can buy land anywhere and put up any structure, whether commercial, industrial, or residential. This chaotic way of life has become a norm in Kenya, yet prices would have been contained if areas were zoned.

Today, an “investor” will be given a license to set up a plastic manufacturing plant right on the edge of a river, and another allowed to set up a steel manufacturing plant in the middle of residential areas.

Although investors seem to have a free hand in setting up their industries anywhere, they are soon swarmed with slums and security becomes a nightmare. Congestion and poor infrastructure due to a huge population in small areas means industries cannot perform well.

GREED AND CHAOS

In 2012, prices were driven mainly by speculation on how county governments would take shape and what main projects the central government would be involved in, says Mr. Gitau.

Although it is only human to want to push for more, each time a new buyer is willing to pay higher than the previous one, this goes back to the Physical Planning Act.

Developers are free to put up any structure, anytime, anywhere, and this sets in motion competition to do the same, he says.

“In Kenya, prices are controlled by what I call a cocktail of greed, a love of a chaotic way of life and ignorance on the part of buyers.

In some cases, buyers only need to think long and hard to realise they could get bigger land in a better area but in most cases they are driven by the neo-colonial belief that owning land in certain areas will make one look better,” adds Peter.

Today, Karen is a pale shadow of its former self. We all grew up knowing Karen as a green suburb full of trees, with horses, birds, butterflies, monkeys and the occasional leopard.

Today, sub-divisions are at a quarter acre. Anyone with a little money wants to be e “living in Karen.”
The results are mabati shanties all along the slip way and quickly spreading into the inner parts.