Is Kitengela property bubble about to burst?

Away from the dusty and overcrowded Kitengela town and the weather beaten rental apartments that one sees along the road as you drive towards the Namanga border, a more subtle ring of well-planned residential estates is coming up that could define homes for Nairobi’s middle income class.

But a new challenge lurks. It is no longer as easy to sell a plot as it was even a year ago.

A host of changes are under way in the area, including an influx of the city’s newly rich moving into the previously industrial hub and home to low income individuals working in the nearby manufacturing firms, which may significantly alter the profile of the town.

Nearly a dozen new multi-family residential developments in gated communities are at different stages of completion, with developers hoping to cash in on the bargain-hunting home buyer, driven from inner city estates by exorbitant property prices.

Milimani area around Yukos, which is the more exclusive part of Kitengela is, for instance, taking the lead in setting the minimum development standards which land owners hoping to put up homes around the area have to match, reducing the possibility of haphazard housing patterns emerging.

Already, the University of Nairobi’s Staff Saving and Credit Society has developed several high-end homes that are trend-setting in the now well-to-do neighbourhood that was, until five years ago, identified only by the then isolated filling station called Yukos.

In some cases still, the parcels of land up for sale are within a controlled planned space meaning that the buyer can only put up a specified design.

‘Controlled development’ ranks among the strongest selling points for ready homes and plots for development, and the best way to give an indication of what the target clientele is.

But behind the rosy story of the fast-growing urban centre, a pricing bubble seems set to undermine the transformation that has been propped up by the entry of big brand names associated with upmarket Nairobi.

Property dealers around the dusty town about 35 km south of Nairobi, are a worried lot as business increasingly slows down amidst fears that the runaway growth in property values will soon no longer be sustainable.

Fanned by a highly-speculative class of individuals and land buying companies, average land prices in Kitengela rose more than 20-fold in just five years as middle income households eeking to dump their landlords in Nairobi, bought land to build their own homes.

So what began as an industrial hub for a handful of cement manufacturers and export-oriented medium-sized firms a few decades back in now a bustling town where most workers in these companies can only dream of owning property. It is now well beyond their reach.

The transformation was most steady until 2011, when commercial banks and mortgage lenders loosened their purse strings to provide funding that enabled thousands of middle income earners to buy land and build homes.

Alex Muema saw it all and reckons, in retrospect, that those were brilliant times for his land dealing business but he knew the boom would hit a rough patch sooner rather than later.

“Land prices in the area went up too fast, sometimes doubling in just a year and I knew the market was overheating and would soon blow up,” says Muema, the managing director at Ndatani Properties.