Tullow oil exploration fuels property boom in Turkana

What you need to know:

More than 50 new buildings are being constructed in Lokichar where Tullow and Africa Oil recently doubled their discoveries to 600 million barrels.
A prime plot is currently being sold for slightly over Sh300,000 depending on the location.
Two years back the most expensive was Sh100,000 and in 2008 it was Sh50,000.

The search for oil in Turkana is fuelling a property boom in the small town of Lokichar that has seen land prices triple and investors pour millions in rental buildings.

More than 50 new buildings are being constructed in Lokichar where Tullow and Africa Oil recently doubled their discoveries to 600 million barrels — enough to sustain commercial oil production.

A prime plot is currently being sold for slightly over Sh300,000 depending on the location. Two years back the most expensive was Sh100,000 and in 2008 it was Sh50,000.

Investors are betting on the cash that will flow to the Lokichar basin once development of the blocks starts either next year or in 2016.

A spot check by the Business Daily revealed that the buildings are mostly guest houses, offices, shops and restaurants, serving contractors and workers hired by the oil giants.

“Housing business is booming and we have plans for increasing our room numbers, which currently stands at 28. The cost of each room is now Sh1,250 up from Sh700 that we used to charge by 2011,” says Emmah Etir, the manager Chance Guest House.

Much of the demand is also riding on Kenyans’ love affair with investment in plots of land, which has seen residents from outside Turkana County snap properties.

The feverish rises in rent and land prices have some Turkana residents worried a bubble may be forming, but most property dealers say there is plenty of room for the upward momentum.

Tullow Oil is in agreement: “Developing oil resources is a long term venture which demands large initial capital investments and, as the sector matures, it creates many more opportunities,” said Tullow Kenya country manager, Martin Mbogo.

“Kenya is still in the budding stages of this cycle, but has shown great promise for future rewards.”

Tullow says businesses across Kenya last year earned Sh8.2 billion in revenues from supplying services to the oil firm and its contractors.

The firm in February said the government considers the start of production and exports as a “national priority.” The companies are working to start field development.