Investors cash in on Mombasa land rush as property prices soar

For many years, Utange was a sprawling refugee camp. But the tents and shacks that stood here are now long gone— replaced by new elegant buildings as developers scramble to get in on the action.

Prime land in Mombasa is up for grabs as a property boom like the one witnessed in the 1970s continues to push up home prices in the coastal town.

The cost of land and residential property in prime sections of Mombasa has nearly doubled in the past three years.

In the upmarket Nyali suburb, the value of land has hit the roof in the past two years with half an acre going for Sh30 million compared to Sh15 million less than three years ago.

Rents for three-bedroom houses range between Sh60,000 and Sh90,000, locking out many prospective tenants who consider the prices too high for an area that does not have sufficient water and sewage system. High-rise buildings are replacing stand-alones as old Nyali residents sell their homes to new developers. Others have moved to more spacious areas such Vipingo Ridge where there is also privacy.

Land-sub-division

Vipingo Ridge is about five kilometres from Mtwapa on the way to Kilifi. The investors acquired a piece of land about 2,500 acres that was subdivided into one-acre plots which are selling at between Sh15 million and Sh20 million depending on the location. A good number of buyers have built maisonettes here.

With the exception of Greenwood, Oleander and Coral drives which have maintained their original face, the rest of Nyali has undergone big change.

Apartments are also popular with young professionals, especially from Nairobi and those in the diaspora seeking to own property in the country. The ready flats are convenient since it is difficult for a developer living abroad to supervise construction.

The congestion and the need to accommodate a fast- growing population in Mombasa has opened new markets for real estate developers.

The planned expansion of the port of Mombasa and Dongo Kundu by-pass to start early next year will, for instance, spur development in Changamwe.

The area’s rise as a commercial hub started in 2007 when residential houses started paving way for the Container Freight Stations (CFSs) concept that was adopted to address congestion at the port.  There are now more than 15 licensed CFSs in Changamwe. One requires at least 10 acres to build such a facility. This has increased the value of land in the area, with investors scrambling for a piece of the business.

From what has been going on in Utange, it is clear that the property development bug has bitten this once crime-prone and neglected area.

Market analysts say investors are scrambling for all available space in Mombasa to satisfy growing demand for housing. Utange growth will soon rival Kiembeni estate’s which targets middle income earners working in Mombasa and wishing to acquire homes or rental houses.

“It is the new frontier in property development north of Mombasa which promises stiff competition to established estates,” the chairman of the Kenya Property Developers Association Coast chapter, Mwendwa Thuranira, said.

But there is growing concern that the rush has resulted in unplanned and uncontrolled developments over the last few years.

The Mombasa City Council admits that infrastructure development has not kept pace with real estate growth to cater for a population that conservative estimates show has increased twofold in the last five years.

Town Clerk Tubman Otieno says property developers may be forced to construct more storied houses as spaces are taken up. The cost of the land in Mombasa’s suburbs have increased more than twofold in the last five years.  

The tarmacking of the Utange road has, however, improved security and with more people acquiring plots in the area since 2000, property owners are making a killing.

Land prices have quadrupled, with an acre going up to Sh800,000 from an average of Sh200,000 in four years.

“The prices have been appreciating since 2005 and an acre that used to sell for Sh2 million two years ago currently fetches upwards of Sh6 million,” says Mr Thuranira who is also the chief executive officer of My Space Properties, adding that a significant number of investors are from Nairobi.

“This is the only place you can find land in the suburbs and which enjoys amenities such as piped water and electricity, qualifying it for major developments,” says Mr Thuranira.

In Nyali, which has also witnessed an explosion, a sudden rush by property developers to put up apartments targeting the working middle class has seen the value of land spiral.

Mtwapa, which is also an emerging and attractive area for property investments and a destination for home owners, especially retirees, faces infrastructural challenges largely due to unplanned growth and prohibitive prices, Mr Thuranira says.

Due to the poor planning at the Kilifi town hall or failure to implement the plans over the years, Mtwapa is in a mess. Until four years ago, social services in the area were virtually non-existent. The Kilifi Town Council has little control over the town in which it does not own a single plot.

Named as the fastest growing town in East and Central Africa by a recent UN report, the value of the land in Kilifi has increased significantly.

Depending on the location of the plot, a quarter of an acre sells for Sh3.5 million, up from Sh1.5 million two years ago, while a 50 by 100 feet plot is going for Sh2 million, up from Sh850,000, according to Mr Genson Kamau, a land agent.

Rents have also gone up by more than 40 per cent in the past year and range between Sh10,000 and Sh12,000 for a one-bedroom house and Sh15,000 to Sh20,000 for two bedrooms.

The Local Government ministry together with the council has developed the Digital Mapping Strategic Urban Development Plan for Mtwapa town, which was launched last year.

One of the options the council might explore is demolishing houses that do not conform to development plans, some of which stand on access roads. There are also plans to construct a bypass road for Mtwapa town which will start from Shanzu and skirt Shimo La Tewa prison to rejoin Mombasa-Malindi road at Majengo, about three kilometres from Mtwapa town.

Pushed by shrinking land in neighbouring areas such as Bamburi, Kiembeni, Shanzu and even Nyali, there are hundreds of people who are not only eying Utange as their future homes, but property developers have already struck deals with financiers who have committed resources to projects in the area, says Mr Thuranira.

A number of projects have been lined up in Utange. An international school has acquired a 20-acre plot and is now gearing up to break ground for a state-of-the-art school complex, while 100 acres have been identified for a mixed development that comprises apartments, bungalows, mansions, flats and commercial centres.

Kenyans of Somali origin who grew up in the area during its “refugee” status and who have since migrated to Canada and the US have deep attachment to Utange that it is becoming their preferred investment destination and to most, a place to build their retirement home, Mr Thuranira says.

After the refugee camp was demolished and developers started stretching their appetite for land beyond Bamburi and Kiembeni, Utange started coming up, says Leah Bryant whose family owned 280 acres of land and have lived there since the 1970s.

Spur development

“Since we owned most of the land here, we felt that the best way to spur development was to sell part of it and open up the area for people to come in. We figured it would also improve security,” Ms Bryant says.

After sub-dividing the farm in 2000, they sold a few dozen acres for a paltry Sh200, 000 an acre, which opened the floodgates for investors who wanted to own a piece of Utange.

She notes that at the moment, and with relatively improved security, they are not in a hurry to sell the remaining part of their farm, preferring to wait until land prices appreciate further.

“When prices were low we sold a couple of pieces to speculators who resold it at exorbitant prices. Although we have had offers of up to Sh7 million per acre I think with the construction of the by-pass road these prices are bound to shoot up further,” says Ms Bryant, who intends to put up some flats and other housing units for sale as well as a retirement home.

She sees Utange growing into an up-market estate with well manicured lawns and gardens and with neat bungalows in the background.

But according to Mr Thuranira, developers should be cautious and only put up property that can stand the test of proper planning and design. He called for measures to check unplanned developments and provision of amenities even as the estate takes shape.

“At least since we now know what lack of proper planning can do to urban settlements with examples of messy towns and estates all over for us to see, so we must make sure Utange does not fall into the same trap. We can model the estate into a well planned neighbourhood,” he says.