@ Vitu was just looking at old thread as I re evaluate my holdings. I realized I might be overlooking real estate. I am re questioning this bubble scenario every one is saying we are in. Growing economy, rural urban migration, is just going to increase demand especially in middle and lower income housing.
My plan get a mortgage which I can definitely channel money I have been pumping into the NSE into the mortgage and get a tenant to pump in the rest. Buying a 4.8 m house get a 3.8 m mortgage. Repayment come to 50K rent comes to 30 K which I will be pumping direct into the principal and repayment will be done in 5 years as opposed to 15 years. At the end i will have paid around 4.8 m + my initial deposit of 1m total investment is 5.8m. The key is to pay into the principal from the get go and this reduces the interest you have to pay.
@ nabwire there are only 16000 mortgages in Kenya. Don't expect to see a flood of bank repos in kenya. Most property is bought cash and through sacco loans. I have been looking through HFCK private treaty properties (Your bank repo) and I can tell you good deals are rare and usually due to other reasons not foreclosure. Surprisingly enough the property on foreclosure are usually more expensive.
My 2 cents

@ Vitu ... I bought it off plan. The price he is selling when complete is 5.5-5.6m. So the return is really not that good for the people who buy then.
I would also include rural urban since the rural "rich" are also moving to Nairobi or trying to set up base in Nairobi also. I know a few I was a raised in shagz and Nai.
The mortgage is at 13.5% with HFCK and there are ways to reduce/ negotiate the rate. If you have a crossover account with HFCK you get discounts on the rate, commitment fees etc.
On the closing cost I negotiated the rate with the valuer, tried with the lawyer and got a minuscule/ token discount. The argument I put forward to them is I'm young under 30, im the first in my cohort of professional friends to foray into mortgages, giving me a discount will ensure i refer my colleagues to them. Worked well with the valuer the lawyer was well established and i guess with lots of clients so was not impressed by my pitch. But i agree closing cost come to 10% of the sale price.
In retrospect I think I should have looked at other forms of mortgage eg kusco mortgage loans, sharia loans etc. Lessons learnt.

While the bubble burst has been prophesied over and over again, it will not occur on itself since due to its illiquidity and inflation hedging makes it more attractive to many people to hold.

Under normal circumstances, house prices may in general hold since people have to live somewhere one way or another.

But under abnormal circumstances, house prices can be pushed down, and when prices start going down, buyers always prefer to wait a little longer to buy cheaper . . .

These are the signs you need to know when to quit real estate – when banks start foreclosure. Banks have neither the strategy nor the motivation to own a repossessed house, and will sell at a discount to get it off their books (and come after the customer for the deficit). When one bank does it, the other banks find themselves in a very unfavourable situation, and respond by selling reposed houses at even juicier and demanding higher deposits for new owners.

And then it becomes just another NSE.

I hope am wrong

I had to revive this to ask a few questions on how foreclosures are handled in Kenya.

1. When a borrower fails to pay off his mortgage, how does the bank go on to recover their money and dispose the property? (Do they set a price or auction to the highest bidder?)

2. How do the new laws hinder the process?

Hehehe 9 years on those writing kizungu Mingi articles are still trying to decipher the real estate conundrum. Look here rafikis, there is enough migunda for each and every single Kenyan in this beautiful country. Most if not almost all of you have at least one somewhere. Unless you are an IDP, Chokora or are disabled. Kenya is not Lavington and Runda. Create your own Kileleshwa in the bush. You can all afford those plots I see going in Nanyuki, marareni, malaa, emali, kajiado etc for well under 100k. Ubaya ya wakenya ni kulia tu ngweeeeeeeeeh from dusk to dawn about phantom problems and endless baseless fears. Reminds me of the Jomo joke about someone with land being given a serekali jembe asking "but who will do the digging?" Bure tu. Buy land and develop it rafikis. If you can afford those smart phones I see you with wagging tongues for hours in polojo daily, you surely can afford a measly plot in Malaa on which to slowly build.