Motorists on a road under construction in Upper Hill, where an agent last week asked for Sh600 million for a 0.9 acre plot. File
What you need to know:
Sh725m - The value of a nine-acre land in Kabete sold to an investor who intends to pull down the colonial-era house and put up a high-rise building.
The cost of land hit new highs last week, defying a price correction projected for the real estate segment. The asking price for Nairobi’s prime plots continued to breach the Sh1 billion mark in a trend that is set to push all but deep-pocketed buyers out of the lucrative business.
Last week, real estate agent Lloyd Masika put up a 2.25-acre piece of land off State House Road for sale, asking buyers for Sh1.2 billion in what has highlighted the pressure that property developers face in prime areas.
The figure works out to a whopping Sh533 million for an acre, which puts it ahead of the fast-growing Upper Hill commercial district where an acre is going for an average Sh400 million although asking prices are as high as Sh600 million.
Timothy Mutisya, a valuer with Lloyd Masika, said the price was informed by the scarcity of such land and the commercial potential.
“You are unlikely to get such a large piece of land being sold within a five-kilometre radius from the city centre in that area. The area is also prime for commercial developments, especially an office block,” he said.
He, however, noted that the Sh1.2 billion was subject to negotiations, adding that prices in prime areas were being driven by demand.
On Thursday, the Legend Management Ltd, a property agent, also advertised for a 0.9 acre piece of land on Upper Hill’s Mara Road with an asking price of Sh600 million. The agent also advertised for a 1.7-acre piece of land on Argwings Kodhek, also for Sh600 million.
In areas like Kilimani, sellers are asking for as much as Sh450 million for an acre while along Ngong Road prices average Sh350 million an acre. The property’s value is likely to have benefited from the recent completion of the nearby Western Ring roads that have seen a huge growth in construction.
The infrastructure-driven value gains have prompted the government to start looking for ways to earn a share of properties’ value appreciation. Earlier in the year, the government was mulling proposals to review the Rating Act and Valuation for Rating Act with a view to introducing the betterment tax.
Betterment tax is a levy imposed on unearned profits that accrue to private property owners from property value appreciation in areas where new infrastructure has been developed.
Away from the city centre, developers are also snapping up single dwelling properties that are on substantial acreage with a view to knocking them down and redeveloping multiple houses. Last week, property management firm Knight Frank sold a Sh725 million nine-acre parcel of land in Kabete. The buyer intended to pull down the colonial-era house sitting on the property and put up a high-rise building.
Mr Mutisya said the price tags reflect the value of the land with the houses on them accounting for very little of the selling price. The buyers are looking to develop many premium residential units to recoup the investment, he said, while some may also be buying the land for future use.
“What our clients are looking for is not what is on the ground for now but what one can do with such property in the next five to 10 years. They are anticipating that there will be no such land to buy in the future,” Knight Frank Kenya managing director Ben Woodhams told the Daily Nation in a past interview.
