Thika road construction overlooking the Githurai round-about intersection. Photo/LIZ MUTHONI
With only months to go before builders finish the Sh27 billion Thika Road, new investors are already moving in to stake claim on new opportunities in a rush that is pushing property prices along the 40-kilometre super-highway to the skies.
The scramble for space along the hitherto subdued neighbourhoods has intensified with former loss-making coffee, ranch and sisal farms making fortunes as real estate investors jostle for investment opportunities along the highway and its northern by-pass.
The results of these developments have been astronomical price increases for plots along the stretch.
Between Ruiru and Juja, for example, the price of an eighth of an acre rose from Sh1.5 million in 2009 to Sh2.5 million in December 2010.
The same is now going for Sh3 million. Prices of land in the area have been growing on average by 50 per cent every year, helping to push the lower income groups further from the superhighway that is now inhabited by the middle-class.
The rise in the number of proposed multi-billion Shilling gated-community estates along the stretch is luring middle-income investors, previously concentrated in the Nairobi suburbs of Kilimani and Kileleshwa among others, into the plains of Ruiru, Roysambu and north towards Thika where virgin land is still available.
Coupled with these is the demand for social amenities — like schools, shopping malls and hospitals — which investors are turning to, hoping to cash in on the new liquid investors and the middle class.
“There is a huge demand for homes along the superhighway and this will require that home owners are supplied with recreational facilities like shopping malls,” said Mr Daniel Ojijo of property development group Villa Care.
At the Roysambu junction, a Sh450 million shopping mall developed by Oasis Capital is set to come up and will have 300 parking spaces, several supermarkets, cinema halls, conference centres and offices.
The mall will also mark the entry of multinational Scandinavian supermarket chain, IKEA, which specialises in furniture.
It will also open a battle for customer’s wallets since Uchumi Supermarkets also plans to build another mall in an adjacent plot.
“The shopping mall indicates the need to serve a growing population with higher purchasing power. It will set standards of property development along the superhighway,” said Architectural Association of Kenya (AAK) chairman Steven Oundo.
The entry of IKEA, and first along Thika Road, an area that has for long been associated with low and low middle income groups, is an indication of the growing consumer sophistication in Kenya.
It will also intensify competition among the supermarkets that is currently being played out by Uchumi at Ruaraka, Naivas at Roysambu and Tuskys in Thika.
Data from the mortgage arm of Kenya Commercial Bank, S&L, shows that demand for home loans has been highest along Thika Road followed by Mombasa Road and Kiambu Road.
The loans are both for development of single stand alone units, apartments and for investment in gated communities.
In the 12 months to December 2010, lending to real estate stood at Sh46.5 billion compared to trade (Sh29 billion) and manufacturing (Sh24.6 billion).
“The borrowers were mainly developers doing projects for the middle-class along Thika Road, Mombasa Road and Kiambu Road,” said Mr George Laboso, the head of sales at S&L. Kenya’s economic growth in the past few years, which hit a high of seven per cent in 2007, has resulted in relative growth of a middle class that has triggered a property boom and exponential growth in consumption.
It is estimated that consumer spending has been growing at 15 per cent every year.
This growth has for example resulted in 83 per cent deficit in the supply of residential houses.
“Our current residential housing demand is 300,000 units every year but the market is only able to supply 50,000 units a year,” said Mr Oundo.
Home ownership along the superhighway is expected to be another key driver of this change as residents seek entertainment, shopping, education and other services.
Some of the ongoing and planned residential projects include Thika Greens Limited that plans 800 houses and an18-hole golf course, meaning that it will attract buyers with high income.
In Kiambu, another golf village is planned at Migaa, a new gated community with exclusive villas.
Suraya Property has also planned 788 units on 200 acres of land where the bypass linking Thika superhighway and Kiambu Road meet, giving a new feel to a former coffee farm opposite Runda Estate.
In Juja, a hitherto sleepy town, Oak Valley Developers has planned 751 two and three bedroomed apartments that will capitalise on the presence of Jomo Kenyatta University of Technology in the neighbourhood.
Other mega residential properties that will only be affordable to the middle class include the Tatu City that has planned several hundred units with own shopping facilities to host 62,000 residents, Jacaranda Gardens apartments at Maziwa near Githurai 44 that are almost complete, and the 160 Golden Mile Park apartments at Baba Dogo near East Africa Breweries.
Elsewhere, the Nairobi Pentecostal Church plans to build 600 houses and a university in Mwiki, which is off Thika Road.
All these, projects marks the start of a new wave of commercial property development especially now that the demarcation of Thika superhighway has become clearer, easing fear of demolitions.
Uchumi Supermarkets for example is building a concrete wall around its property in readiness for its development.
Nakumatt Supermarket is also almost completing its shopping mall four kilometres from the Muthaiga roundabout and along Kiambu Road opposite a proposed Uchumi Supermarket.
In the fray for space, Soft drinks maker PepsiCo, which stopped bottling in Kenya under competitive pressure from Coca-Cola in the 1970s, is putting up a Sh2.4 billion plant off Thika and Baba Dogo roads.
