Let me speak from experience. I deal with land mostly in Mombasa. At the height of the boom driven by Somalis, I invested 900K in a piece of land just after JCC Bamburi. That was in late 2011-early 2012. Towards 2013, the prices had shot up to 1.2M. As we are talking, new buyers are currently buying residential at 1.89M and commercial at 2.6. The plots are owned by Ndatani Enterprises Company Limited. http://www.ndatani.com/properties/bamburi-plots
One month ago, Kentraco notified us that they will acquiring some of the parcels of land for purposes of high voltage wires. The plots have been valued at been 2.5-4M. I currently stand to earn 4M by August latest
In the same time, I had invested some money of equal amount with Old Mutual in one of the futures,and the results were very disappointing. I liquidated the same and bought another parcel in Machakos, and am sure I will sell and earn triple, thanks to rapid development from people escaping Nairobi
Let me use a personal example to illustrate how buying land is such a ripoff TODAY. A plot I own in Ndeiya (huko pande sza Lusseggetti) was going for around 200K ten years ago. Then Ubako built a tarmac road. Now my neiba just sold their piece for 12m. I was like, what the ferk? WHICH FOOL BUYS AN ACRE OF LAND IN AN ARID AREA FOR THAT KIND OF MONEY? HOW STUPID CAN ONE BE?
MORAL OF THE STORY: OUR GREED FOR LAND IS MAKING SOME OF US BUY PLOTS AT VERY EXAGGERATED PRICES BENEFITTING THOSE WHO OWNED LAND [SIZE=6]BEFORE[/SIZE] (so the rich become richer as the poor buy their plots from them at stratospheric prices).
As for me, am waiting for the prices to go yet higher so that I can kamua a stupid buyer kamu kamu!
Guka - serikali has a role to play in matters having to do with rental, same way it has a role to play in matters traffic,education,security etc… Otherwise u have all kinds of characters looking for their own interests filling in the gap.
A very minimal role, if I may say so. Hence the Rent Tribunal.
Rather than work on the price (rent) side, I’d rather the gov’t concentrated its efforts on influencing the supply side via e.g serviced land (with all infrastructure like water, electricity, roads, broadband, schools, etc), cheap/affordable capital/mortgage, etc.
and affordable mid to lower income housing to check on the runaway prices. I fear for current crop of kids in high school and even colleges. By the time they find employment, a single room might be going for Kshs 20k per month
Ndeiya n Gikambura r cool places to own land and decent homes are coming up there …i wouldnt call a person foolish for buying there, though security is an issue…about prices i hpe we could do something. . . bt its out of our hands
First! Thank you for bringing this up…I have been on a catch 22 for the past three months deliberating on this issue. I have done my research but CBK or NSE did not feature anywhere… What do I want? A home where I can plant my own groceries instead of going to the market ( a kitchen garden), I want space( once you’re out of my apartment door you’re in someone else’s space or public space)…then there are other expenses it’s not just rent hence it makes sense to get a permanent solution to paying rent which is owning a house most likely taking up a mortgage. Location, location that’s the next headache we all want to live in a good neighborhood so do we have the money for that? No? What do we need to get our dream home in Mathaiga, Karen, Runda just to name but a few… Budget 30m…oh, your account looks good but banks do not finance an empty piece of land… Meaning you need to raise the 30m then the bank will finance the construction. So what do you do? My research has dictated I try and own a house… With 2m your closer to owning a 5m apartment than a 50m house in Runda ( read your dream home). So am on my second apartment… Before I know it I’ll have enough security to take to the bank to finance my dream home… Godspeed!! Notice no CBK no NSE…however if your risk appetite is low stick to 260,000 p.a(read not fully utilizing your potential)… Oh, did I mention you’ll still be collecting rent from the apartments?.. Ni hayo tu!!
You see the folly of your economic model is that while you stand to make 4m on that plot, your money will be eroded by buying another overpriced plot elsewhere since everyone is thinking like you. Now, 900k in 2011 was a substancial sum had you put it as capital in a running active business say fast food or a club for example. That would have given you a business empire that today would be worth over 10million in assets and still growing. All you have comparatively if you sell is the 4m and no land. Even the old mutual thing is a scam that capitalises on those who have capital but do not want to think. Ask the owner of say Bellavista
with the amount of inflation we have, 20k will be the rent for a roomed house in kariobangi in 2025. land gives you capital gains, something that you wont get when u put the 2million in government bonds
Banks don’t invest in government securities coz. of profit, its coz. of zero risk as its assumed government will always pay. So it depends, if your looking for a safe investment, go to government, I think at your age you choose to go for that but let young men take risks.
Am actually buying a house, where my family and I will have peace of mind, and I can later sell the same at a higher price, just like the plot. In this case, I have something substantive in my hand. Not a projection of 10 of millions in the air, from a business that I wont be managing and relying on trusting others because of my current engagement. In any event, if you also chose not to invest in land now, and wait upon making millions later, when you decide to buy then, it will more pricey. I have seen land which was been sold an acre at 50,000 in 2010 appreciating to 1.8 million, per acre in less than 3 years. That is why real estate is the only sector of the economy doing very well right now. As I ask the owner of Bellavista, maybe you can ask Susan and Muraya or Suraya, the owners of Vipingo Ridge, and the numerous Golf estates springing all around;)
Banks have an investment portfolio with a cocktail of investments that are always shifting in terms of percentage of the overall investmeny portfolio. If you scrutnizw their financials you will realize they are nothing more than glorified loan sharks or shylocks
After all is said and done, owning a piece of land is the best thing you can do as a young man. In fact I bet everyone on this thread owns at least an 1/8 somewhere and will buy another funds allowing.
My take is that the return of 4m( which is also luck because of Ketraco) is very low for you to earn after four years having invested a whooping 900k back then. This is because of the age old fact of low risk low return. Thats why despite all the hype a lot of speculators are really making nothing considering the period of speculation and inflation. As for Suraya, they have made an active business on land ie real estate development and sale
Land is only overvalued in Nairobi, bigger towns like Mombasa, Nakuru and Eldoret and some parts of central. For a person like me, a prime plot in Bungoma, 100 X 100 would go for about 1M, putting up a decent four bedroom would cost around 4m, you have a house of your design, nobody asks for rent from you for rest of your lif, when you die your kids have something to inherit. Agricultural land would go for 500k an acre, you can choose to built and settle there and if you are smart, within 5 years, you will have scooped your money back. I will still go for land, but not in Nairobi.