The real Estate market in Kenya has finally cooled off

[Globalcitizen12]

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As an investor in the sector I am happy that speculators are leaving the market. Now it just a matter of the market normalizing land prices and business will recover. There is still surplus of housing units especially in upper and middle income markets. Occupancy in these markets is at 87% to 95%.. Most investors who did not build using cash or lower interest loans are getting their fingers burnt badly. The focus now should be on provision of infrastructure to support investments in new markets..Road network around Nairobi neighbouring towns has allowed the market to expand 50 kms away from the city North of Kiambu towards RV. I am surprised that sleepy towns such as Viewpoint Rukuma are now housing Nairobi residents.. One better thing of living in these areas is you get access to low priced food and schools. Plus the quality of life in the village is far much better

[Georgesoros]

Global...
Are you sure?
Ive been hearing that since 2010..
Evidence please.

[Globalcitizen12]

When is last time your heard about suraya and others ..The market has cooled off kabisa..

[Georgesoros]

I still see apartments for 40 million. That doesn't look like  stability

When is last time your heard about suraya and others ..The market has cooled off kabisa..

[Empedocles]

When is last time your heard about suraya and others ..The market has cooled off kabisa..

Doubtful.

The main driving force for our real estate is corruption proceeds. CBK records only about 20k mortgages in the whole of Kenya.

2017 is an election year, with billions expected to be blown, from the "lowly" MCA upto the president, and hundreds of government jobs, parastatals, etc. Once these positions are filled, most if not all of the newly crowned "public servants" are first going on a massive looting spree then a shopping spree, priority being real estate.

A little story: in August 2013, just a couple of months after the cabinet secretaries had been sworn in, a certain CS who did not have previous access to millions, paid cash for 1.5 acres vacant land in Karen. Price? Sh60m, and said CS barely negotiated. The house was constructed and completed within 9 months, including sauna, swimming pool, multi-car garage, etc. A spectacle to behold, it is.

Trickle down economics, Kenyan style.

As long as real estate is seen as the safest bet for holding ill-gotten wealth, that's what sustains our real estate market. Waiguru? Ministry of health scandal? Bank's management siphoning cash? Real estate.

One day the market will crash, but not yet.

[MOON Ki]

One day the market will crash, but not yet.

Kenya is so full of crooks and aspiring crooks that the only safe places to invest are in things one can see and touch: land and real estate.   But, for some reason, land is easier to steal, so there isn't an overwhelming variety in choice for most people.   Land seems to be good only if one has the connections (and guaranteed safety) to plan ahead for compensation in relation to some infrastructure project.

[Globalcitizen12]

Empedocles,
You got me wrong.. What I said is that speculators are leaving.. Karen market and markets of Heavy thieves will always thrive as this is a niche market.. The general market of good guys speculation on 40 by 50 plot in kagundo is what is drying up and with it normalcy is returning to the market..

[Empedocles]

Empedocles,
You got me wrong.. What I said is that speculators are leaving.. Karen market and markets of Heavy thieves will always thrive as this is a niche market.. The general market of good guys speculation on 40 by 50 plot in kagundo is what is drying up and with it normalcy is returning to the market..

I beg to differ

Using your example of Kagundo, a place I know quite well, the frenzy is still on. What's driving the real estate frenzy among ordinary folk is not corruption, but the simple fact that there's really no other way of making bucks, aside from stealing, but for that you have to be in gava.

There's no industry (like almost everywhere else in the country), what jobs are available in the market are slowly but surely dwindling, and people still gotta live, eat, mpesa bucks. So real estate is mainly all there is. Have a look next time while driving along Kagundo road towards Kagundo. Admire the staggering proliferation of all the struggling hardware stores along the road, selling their wares, touting the false strength of real estate. Real estate is seen as king. And where there's a king, speculators thrive.

Simple Homes. A dream for Kenyans. Advertised through slick videos on Facebook, stolen from US architects. Beautiful houses with central heating( ). Cheap. Pay something like Sh50'000 per month for up to 40 years and get a fantastic 4 bedroom house. Just collapsed, taking 16'000 for a ride, 16'000 who paid a joining fee of 55'000 each and 16'000 who paid up to Sh380'000 deposit, for real estate.

16'000 wanainchi as speculators, burned, in less than a year.

[hk]

There are 20k mortgages in kenya but what most people don't count is the number of sacco accounts in Kenya. Almost every sacco member have some kind of loan and a significant number in plot/building loans. 

[RV Pundit]

Precisely. Most of housing you see in Nairobi outskirt are financed by Sacco loans. Corruption cannot explain this. It would explain every sector. The guys building in Kangundo or Kitengela are simple folks borrowing from saccos and strapping few resources up - to build small houses there.

Real estate in kenya is maybe 50yrs from over-supply.

There are 20k mortgages in kenya but what most people don't count is the number of sacco accounts in Kenya. Almost every sacco member have some kind of loan and a significant number in plot/building loans. 

[Empedocles]

Precisely. Most of housing you see in Nairobi outskirt are financed by Sacco loans. Corruption cannot explain this. It would explain every sector. The guys building in Kangundo or Kitengela are simple folks borrowing from saccos and strapping few resources up - to build small houses there.

Real estate in kenya is maybe 50yrs from over-supply.

There are 20k mortgages in kenya but what most people don't count is the number of sacco accounts in Kenya. Almost every sacco member have some kind of loan and a significant number in plot/building loans. 

Precisely?

Ok, why don't you give us the breakdown of registered saccos (not the con ones...of which they're very many), number of members, and the percentage of said members who use sacco loans (please include average and median loan amounts...with sources) to finance real estate investments?

Once we have your data, those which make you yell "Precisely", maybe we can join you.

I'd be happy to.

[hk]

Precisely. Most of housing you see in Nairobi outskirt are financed by Sacco loans. Corruption cannot explain this. It would explain every sector. The guys building in Kangundo or Kitengela are simple folks borrowing from saccos and strapping few resources up - to build small houses there.

Real estate in kenya is maybe 50yrs from over-supply.

There are 20k mortgages in kenya but what most people don't count is the number of sacco accounts in Kenya. Almost every sacco member have some kind of loan and a significant number in plot/building loans. 

Precisely?

Ok, why don't you give us the breakdown of registered saccos (not the con ones...of which they're very many), number of members, and the percentage of said members who use sacco loans (please include average and median loan amounts...with sources) to finance real estate investments?

Once we have your data, those which make you yell "Precisely", maybe we can join you.

I'd be happy to.

Download the financial access household survey http://fsdkenya.org/publication/finaccess2016/ and go to chapter 8 .You'll find most people borrow from saccos for land/house purchases.

[Empedocles]

Precisely. Most of housing you see in Nairobi outskirt are financed by Sacco loans. Corruption cannot explain this. It would explain every sector. The guys building in Kangundo or Kitengela are simple folks borrowing from saccos and strapping few resources up - to build small houses there.

Real estate in kenya is maybe 50yrs from over-supply.

There are 20k mortgages in kenya but what most people don't count is the number of sacco accounts in Kenya. Almost every sacco member have some kind of loan and a significant number in plot/building loans. 

Precisely?

Ok, why don't you give us the breakdown of registered saccos (not the con ones...of which they're very many), number of members, and the percentage of said members who use sacco loans (please include average and median loan amounts...with sources) to finance real estate investments?

Once we have your data, those which make you yell "Precisely", maybe we can join you.

I'd be happy to.

Download the financial access household survey http://fsdkenya.org/publication/finaccess2016/ and go to chapter 8 .You'll find most people borrow from saccos for land/house purchases.

Thanks.

Quick glance only: can't yell precisely yet.

Will go through it this evening.

[RV Pundit]

Empo - I think you've been answered - Kenya co-op movement is the largest in Africa and one of the largest worldwide - it explain a lot about our resilience. Kenya long figured out how they can borrow their own money, buy property as groups (SACCO buys) and sell to members - and then loan members. One SACCO can easily buy 1,000 acres cheaply and sub-dived - give it to 8,000 members and you have  8,000 units.

[Georgesoros]

I think SACCOs are excellent idea, but they need to focus on other things other than property. Industry is severely lacking.

[Georgesoros]

The only business growing is government!! People are too dependent on govt - for pay, contracts, steal, etc.

[Empedocles]

Empo - I think you've been answered - Kenya co-op movement is the largest in Africa and one of the largest worldwide - it explain a lot about our resilience. Kenya long figured out how they can borrow their own money, buy property as groups (SACCO buys) and sell to members - and then loan members. One SACCO can easily buy 1,000 acres cheaply and sub-dived - give it to 8,000 members and you have  8,000 units.

No, haven't been answered.

The information I requested is not in the document.

What I was looking for, and find impossible to locate, is what's driving the real estate market, to a point where land appreciation is beating all other economic indicators by a very significant margin.

P.S. I've sold land to a couple of SACCOs, for subdivision. I kind of understand how it works.

[Empedocles]

I think SACCOs are excellent idea, but they need to focus on other things other than property. Industry is severely lacking.

There's no quick money in industry.

There's quick money in land.

Finding out why will help Kenyans understand what's going on.

[Empedocles]

Speaking of quick money in land, grabbing of prime property is happening once too often in Kenya:

@JBoinnet @NPSOfficial_KE gang attacking my friends house on Warai South rd right now. HELP @suemc_phee @UKenyatta @WilliamsRuto pic.twitter.com/raLMRHvrG4

— Jax #WhyILoveKenya🇰🇪💖 (@Jackie_Arkle) March 12, 2017

Justice, Kenyan style, was swift and merciless:

@JBoinnet @GenNkaisserry This Gang of Land Grabbers have spent less than 3 hours at Karen @PoliceKE stn walked free smiling @Jackie_Arkle pic.twitter.com/XEWKEmxFrk

— Allan S.M Madoka (@allanmadoka) March 12, 2017

Perpetrators are well known:

the main thugs Julius Kariuki Mungai and his son are free. Hired thugs from Wangige

— Jax #WhyILoveKenya🇰🇪💖 (@Jackie_Arkle) March 12, 2017

Then Sonko steps in, with wise fatherly advice:

I'm  appealing to any police officers around that area that these goons should be shot dead. @PoliceKE

— Mike Sonko (@MikeSonko) March 12, 2017

In case of any repercussions i will stand surerity and give a reward of 500K to any officer who'll shoot & kill any of these shameless goons

— Mike Sonko (@MikeSonko) March 12, 2017

[Globalcitizen12]

Nairobi or Kenya property rights are not guaranteed..I almost lost 30k dollars but due to my sceptical nature I trusted my gut instinct