Homes market shifts to small towns
Posted Thursday, February 10 2011 at 00:00
“Recent investments in infrastructure are opening up outlying areas, cutting the costs to developers and raising the value of property in fairly remote places,” said Njeri Cerere, the chief executive of Kenya Property Developers Association (KPDA).
Technology has also helped the expansion because one does not need to close to the capital in order to transact business.
In Kisumu for instance, the government plans to construct a dual carriageway into the CBD, and to back it up with ring-roads and bypasses to the refurbished airport.
The lakeside town has recently become a haven for property hunters looking to take advantage of its strategic location as the largest town after Kampala in the greater Lake Victoria basin.
More recently, it has also benefited from the influx of banks and institutions of higher learning and the on-going upgrade of its airport to international status.
Some real estate market observers however reckon that the changing fortunes of investors in Kenya’s small towns is the product of high population growth, cheaper land and faster approvals by authorities compared to Nairobi.
“Investors are following population trends across the nation and a number of towns have reported significant growth,” said Ms Cerere.
Kenya is adding one million people annually to its 38.6 million population 22 per cent of who are aged between 15-24 years.
It is estimated that 32.2 per cent of Kenyans or 12.4 million live in towns, up from 23.6 per cent or 5.6 million in 1990 — assuring property developers of steady demand that has seen the prices of apartments in Nairobi’s middle-income areas more than double in the five years.
Kisumu’s population is estimated to grow at the rate of 2.8 per cent annually with a density of 828 persons per square kilometre.
Nakuru boasts a population of about 1.6 million and is estimated to be growing at the rate of 16 per cent annually.
Mr Ojijo says that the high cost of land remains the top most obstacle to real estate development in Nairobi besides the thick layer of bureaucracy investors must go through to acquire it.
The latest market data indicates that land prices in prime sections of Nairobi and surrounding districts nearly doubled in the past 14 months.
The standard eighth of an acre piece of land in Mlolongo along Mombasa Road is now priced at Sh1.6 million up from Sh900,000 14 months ago while in Kahawa West on Thika Road, prices have risen to an average of Sh1.5 million from Sh900,000.
It is this pricing that is forcing developers to look outside Nairobi with towns such as Nakuru, Naivasha and Kisumu as the key beneficiaries.