Management Magazine
Special Report

Real estate in rural Kenya

Before buying rural land, design a well-informed plan for it.

BY WANJIKU KIMANI

It is often said that real estate is one of the safest investments one can take part in. Kenyans especially, are often overly keen on buying land, sometimes in far off corners, with the expectation that the future returns will mitigate the cost and risk. True, there are some obvious advantages to buying land as a means of investing extra funds. The fact that it appreciates over time, unlike many other assets means the chance of making a profit are almost guaranteed. 

There is also the chance of regeneration of the area in which the land is located, usually due to government initiatives, or an influx of people, meaning your piece of land will be in high demand, for either commercial or residential purposes. The issue comes in when one purchases land without a proper plan to develop it. This could result in one spending their savings and having to wait many years before seeing a return and lacking further funds to develop the land. This is the situation that many Kenyans who buy land in rural areas face. 

Real estate opportunities in Kenya’s rural areas

Rural Kenya makes up over 82 per cent of the total land mass, confirming the high potential that these areas possess for development. Some areas are not habitable, while others are set aside for the natural environment or farming but this still leaves huge tracts with the capability of being developed into urban areas. The farming communities often have their own distinct society where they build homes, cantered on their farms, and this creates room for developers to buy up land, and promote urbanisation. 

Many Kenyans view their rural homes as mere burial sites, with not much financial value. They have lived most of their lives in rented houses, and unfortunately, do not see the worth of constructing a home in the ‘bundus’. This mindset though is slowly changing as studies show there has been a steady growth in the population of Kenya’s rural towns after the establishment of devolved governments. 

The resultant boon for property investment is the consequence of these devolved units and more urban dwellers seeing the opportunities available away from the city. Smaller towns in far flung counties such as Kakamega, Kisumu and Vihiga bustling business centres and those who own land around the town centre are making incredible profits with the rising demand for retail and commercial space, as well as residential housing. The presence of active county officers offers further allure to city dwellers to settle in smaller towns as well as the need to establish modern government institutions and private investors who take advantage of the relatively low prices. 

The infrastructure is constantly being improved with road and electrical connections powered by the national government, making the outskirts of city centres viable places to set up buildings. The governments State Department of Housing and Urban Development has previously recognised that counties present the new, untapped frontier for real estate development in the country.

The travel industry is also boosting this upward trend with world-class hotels being built in remote areas, thus creating a unique eco-system which will sustain constant growth. With more resorts and hotels popping up outside Nairobi in areas such as Nakuru and Naivasha, intrepid entrepreneurs are taking advantage of the added traffic to establish tourist-based establishments including shops, and entertainment spots. This consequently translates in more spending by the visitors, boosting the economic viability of the area, and thus advancing Kenya as a whole. 

The flip-side

Although land in rural areas may be abundant and cheap, there is the risk of no prospect of development and the land lays fallow and unused. This happens often when people jump into buying plots without proper research as to the future of the area, and the role their land will play in the prosperity of the area. Such individuals may end up with ‘dead capital’. There are numerous cases of people building shopping areas in the rural areas with the hope that they will boost the economy, but soon realise that the village shop will give no returns. That mansion they built in the village due to societal pressures will eventually be sold off as a source of capital for another project, resulting in a huge amount of lost money. 

To ensure the success of an investment into real estate, especially in rural areas, one needs a definite and concise plan as to what they will use the land for. There needs to be certainty that roads, water and electricity will be able to reach their plot, as these are the basics that lure people to relocate to any area. Without these basics, one might as well use the land for farming, which might not have been the original intention. 

Although views may differ depending on whom you ask the general view is that investing in real estate is a fairly risk-free and profitable way to multiply your savings, but the question still remains – is it prudent to invest in less developed areas, where one is unsure about the future? This will remain to be seen. 

Wanjiku Kimani is a Digital Marketer and freelance writer based in Nairobi. Email: wkimani1989@gmail.com

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