Real Estate Revolution in Kenya


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  • By Joyce Gatwiri.

    Email joyce@mtkenyatimes.co.ke

    The real estate sector has been a source of strength for the global economy since the most recent economic downturn. This has been particularly true of the residential property sector. In most countries, house prices have been particularly strong over the past few years. The strong performance of the property sector and the general resilience of financial institutions stand in sharp contrast to the experience of the early 1990s. In the previous episode, the boom and the subsequent burst in the property sector, particularly on the commercial side were a major contributor to the banking problems.

    A house is a long lived asset that delivers consumption services over many periods. In many respects it is more like a durable good than an investment asset. Given that residential property can give accommodation to its owner, it has an intrinsic reservation value determined by the discounted by value of the expected service stream. Housing price fluctuations can be driven by macro factors and intrinsic characteristics of the housing market itself. Empirical evidence suggests that the market has its own distinct dynamics. While house prices are determined by construction costs in the long run, the supply of new housing can only respond sluggishly to demand in the short horizon. Hence, house prices may deviate from their long term trends for a considerable period of time.

    Real estate is an important investment asset in the economy. When property prices rise above the cost of construction, it is profitable for property developers and other non financial firms to construct new buildings. However, the boom in the construction sector boosts employment and demand in the property related sectors. Kenya, among other countries continues to experience heightened pressure on land with gradual rise in population. The high demand for residential housing has witnessed land and property prices sky rocket to an all time high. Scramble for office space is no strange phenomena as a larger part of the younger population seem to be acquiring a bias to entrepreneurship. Business corporations too need additional space as they expand their operations. Although the government has in the last few years been devising formulas of settling her population, the problem is far from over. A large number of the populace still lack access to decent housing as a fundamental human right which is also part of the MDGs as we gear towards attainment of vision 2030.

    The real   sector in Kenya in particular has seen a boom that begun somewhere in the mid to late 2000s because the property market is responding to increased demand. Amidst robust economic growth, values in Kenya’s residential property continue to rise. Many players have come in to offer solutions in different capacities. While most of the players come in to fund development of already acquired land, others do as much as acquisition of the land and developing on behalf of their client. Investment groups, labelled as chamas have also played a big role in acquiring property for their members by pooling resources together. In our special feature, we will have a closer look at one real estate company that has revolutionised land and property ownership in our time.

    Gakuyo Real Estate

    It was registered in 1997 by Rev David Ngari with a vision to change lives of the middle and low class population by providing affordable products and services. In a competitive market like real estate he says, ‘I have maintained a high level of trust to my clients in a field where crooks take advantage by stealing money from innocent and hardworking Kenyans who are simply out to own a plot or a house.’ There is need for investors to look at the bigger picture and provide housing for the neglected lower middle class.

    Affordability re-defined.

    An entrepreneur and renowned preacher, Rev Ngari has engineered a number of projects to ensure housing becomes more affordable and people can now have decent houses to bring up their families. Surprisingly at Gakuyo, one can get plots from as low as Ksh 70,000 and above and houses as low cost as Ksh 1.35M. Further, the company has thought to innovate by integrating Ekeza Sacco so that members can easily access funding through their savings in the Sacco. One only needs to book the house with as low as Ksh 100,000, join Ekeza Sacco, save for 6months and the Sacco buys the house for you.

    Gakuyo has acquired 1000 acres between Mt kilima Mbogo in Machakos county and Thika East sub county in Kiambu county. The land is located 18km from Thika town on the Thika Garissa highway next to St Paul’s Kilima Mbogo teachers college. It is also near Oldonyo Sabuk national park and the 14 falls on Athi River, both of which are tourist attraction sites. The project will also be served by the proposed eastern bypass and the plots are already serviced with roads, water and electricity. Kilima Mbogo plains is suitable for agricultural, commercial, residential and tourism development. Gakuyo is selling a 1/8 of an acre at ksh156000, ¼ at 312000, ½ at 625000 and an acre at 1.25M. A buyer requires paying a down payment of 40% of the cost with the balance payable in duration of one year. The CEO Rev Ngari urges members of the public to join Gakuyo Ekeza Sacco save and acquire loans to buy property. He further urges Kenyans not to make themselves poor and miserable by getting prompt loans from shylocks who charge exorbitant interest rates and end up losing their collateral such as stock investments and even land. The projects by the company includes city of David located in Juja, Planet homes in Nakuru, Village Yatta in Matuu and the Chosen Green City located in Kenol/Kabati.

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