Real estate boom creates new crop of Kenya property barons

For the more than 10 years that they have been in public life, Kenyans have always known Vimal Shah and Nahashon Nyaga as industry captain and banking executive respectively.

But in recent months, they have been in the backroom drawing one of Kenya’s most ambitious real estate plans in the country’s history that is also promising to turn them into property barons over the next decade.  

Mr Shah, the managing director of edible oil processor Bidco, Mr Nyaga, a former governor of the Central Bank of Kenya and little known coffee dealer Steve Mwagiru are the local faces behind the Sh240 billion real estate project, dubbed Tatu City. 

The trio has a 50 per cent stake in the project with the remaining half firmly in the hands of Renaissance Capital, the Moscow-based investment bank.

Little is known about Mr Mwagiru who is said to be in his 40s, but people familiar with him say he owns coffee farms in Ruiru — part of which will be occupied by the multi-billion shilling real estate project and has interests in Waguthu Farmers, a major coffee dealer.

In the Tatu City project, Mr Mwagiru is believed to have brought to the table the much needed land, while Mr Shah who is shaping up as a real estate developer, brings in the cash.

Renaissance Capital, the Russian investment bank, is pumping in additional seed money and about 300 acres of land that it gained last year after acquiring a 62 per cent stake in Eaagads — a Nairobi Stock Exchange (NSE) listed coffee grower. 

In the emerging Tatu City shareholding structure the religious and reserved former governor of Central Bank of Kenya Nahashon Nyaga with his elaborate network of friends in Kenya’s business and political arena is being seen as the power broker.

His presence in the project is expected to particularly come in handy in selling the multi-billion project to local investors.

Capital gains

Tatu City project involves the use of private capital to construct a whole new city of 62,000 residents who will live in a well planned environment of manicured homes, office blocks, shopping malls and industrial parks on 1,000 hectares in Kiambu County, behind Kenyatta University.

With the property market having outperformed other assets classes such as equities and bonds, and prices expected to remain bullish, observers expect the owners of Tatu City to reap outsized capital gains in the next 10 years.

A deep look at planned workings of the private city indicate that Renaissance Capital and the three local investors plan to subdivide the land into small plots and resell it to developers complete with the earmarked design for each.

The shareholders in the Tatu City project will also earn annual lease fees from the private investors who are expected to pump billions of shillings in the development of homes, office blocks and shopping malls.

Under the deal, Renaissance Capital and the three local shareholders alongside other yet to be identified investors will put up basic infrastructure on the 1000 ha land then tap investors who will buy parcels of land and develop it under strict specifications.