Why Kenya’s real estate scene is a bubble waiting to burst

[RVtitem]

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[hk]

The bubble has started to bust https://www.businessdailyafrica.com/markets/marketnews/Is-writing-on-the-wall-for-highend-houses/3815534-4293348-2oejyj/index.html . Prices of apartments to let have eased from 100k to 50-80k. In addition occupancy rate has gone down, most buildings have to let signs.

[Nefertiti]

hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?

Even a layman could see this coming.

[hk]

hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?

Even a layman could see this coming.

I am also puzzled. Centum isn't by any stretch of imagination a skilled investment outfit. C.K. kirubi is just a charlatan with his sidekick Mworia who got money the "kenyan" way. For a longtime there was this believe that prices of property couldn't be overpriced yet the underlying economy couldn't justify the valuations. Also there's a dearth of other potential investments if one doesn't either go into real estate or bonds(of course true entrepreneurs shun this). So this has led to bidding up of land and real estate.

[RV Pundit]

Maybe it's about time esp if Gov steps in to deliver cheap mass housing.

[Georgesoros]

Most Kenya properties are bought cash

[vooke]

hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?

Even a layman could see this coming.

[Georgesoros]

hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?

Even a layman could see this coming.

Robina Robina lol
I cant believe you said that!!!
When you're doing great in investment, you want more, until reality sets in. That's why the stock mkt is tanking, and it's the psych 101 of investment.
If you can balance this out, Like Buffet did, you'll be rich.
In fact I have recently found out that just by reading a lot about investments, you can be the next Buffet. But there is a catch - Dont be greedy.

[Nefertiti]

I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.

The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.

David Ndii predicted this stuff.

[vooke]

I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.

The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.

David Ndii predicted this stuff.

Centum is a sham and I said as much. All they do to report profits are revaluations

James Mwange and Oigara are the real deal

[Nefertiti]

Centum is a sham and I said as much. All they do to report profits are revaluations

James Mwange and Oigara are the real deal

If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.

[Nefertiti]

The empire state coming up in Upper Hill...

Investors to build tallest apartment building in sub-Saharan Africa
https://www.nation.co.ke/news/Tallest-residential-building-Upper-Hill-Nairobi/1056-4293390-wf0b66z/index.html

[vooke]

Centum is a sham and I said as much. All they do to report profits are revaluations

James Mwange and Oigara are the real deal

If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.

I meant they are real ceos

[Nefertiti]

Centum is a sham and I said as much. All they do to report profits are revaluations

James Mwange and Oigara are the real deal

If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.

I meant they are real ceos

All these CEOs have invested big in commercial real estate. They are behind the bubble. Equity at least has some innovative ideas - KCB not so much. That pampered babyface Oigara I hoped would bring on board some real game - nothing besides that $500M entrepreneur thing on KTN I saw in Dec - Lion's Den or something like that. That's good strategy if they handle it as VC - with joint ownership - they could get lucky.

[Nefertiti]

If all Kenyan bluechips had proper VC like KCB Lion's Den - and Safaricom Spark Fund - they have the muscle to drive that. That's a real input to the economy than just SME loans or investment banking. Taking ideas off the ground is the hard part for young entrepreneurs.

[hk]

Centum is a sham and I said as much. All they do to report profits are revaluations

James Mwange and Oigara are the real deal

I couldn't agree more. Another one is cytonn. Two rivers mall which is awfully underperforming might take down centum and cooperative bank which is on the hook for more than $300m.

[RV Pundit]

I agree with HK in as far need to diversify investment from real estate to manufacturing and such primary sectors. Time for the bubble to burst....if that will make people invest in other areas of the economy.

[hk]

Another "estate" goes up for auction https://www.businessdailyafrica.com/corporate/companies/Bank-puts-Sh1bn-Kitisuru-estate-up-for-auction/4003102-4294780-9lgsucz/index.html Banks that have houses and buildings as collateral must start revaluing those assets.

[bryan275]

I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.

The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.

David Ndii predicted this stuff.

Robina,

It's the usual self praise for mediocre performance masked by massive price inflation and a poor non investigative press.  Also that mercurial prowess is normally mis sold as being possessed y a certain type of  ethnic heritage.  Shock horror kubme ni porojo tu.

[Georgesoros]

Another "estate" goes up for auction https://www.businessdailyafrica.com/corporate/companies/Bank-puts-Sh1bn-Kitisuru-estate-up-for-auction/4003102-4294780-9lgsucz/index.html Banks that have houses and buildings as collateral must start revaluing those assets.

looks like a Nice design.