Wazua
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Bubble bust..... myth or reality?
Rank: Member Joined: 4/6/2009 Posts: 78
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Ditto..@MV_ufanisi: Slumification is my biggest worry.Take a look at Southlands,Buru and South B after the extensions and 5 storey flats.They are functional slums...no green areas concrete kiosks as barber shops, chemists etc.
A slump can occur regardless of supply vis a vis demand mismatch.Find out what happened in Dubai some time back or banana island in some african capital
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Rank: Member Joined: 1/15/2010 Posts: 625
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Horton wrote:@Mv orite so how is Westlands at 30m mark overpriced compared to sandton at 123m? The 123m is an exceptional case. It prolly has marble floors, gold plated stuff in there etc. It's an outlier, not the average kind of place in Sandton. It's probably like the most expensive apartment in Sandton. Check out this 3 bedroom apartment going for about 9million Kshs(Not Rand!) in Sandton - http://www.pamgolding.co...ource%3dadvanced-search
You can also go to www.privateproperty.co.za and check out the houses and prices? And make sure to check out the amenities and stuff like that for full comparison. This same apartment in Nairobi would prolly go for like 20 million Kshs and for 1M USD in Ikoyi, Lagos. Everytime I fly into Nairobi and see all the empty land, I wonder why land is so superficially expensive that even average middle class folks e.g. a family of two teachers can't afford a decent home in Nairobi.
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Rank: Veteran Joined: 1/20/2011 Posts: 1,820 Location: Nakuru
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and the slummification phenomenon is not only happening in NBO but also in MSA.... http://www.businessdaily...4/-/nfsdxw/-/index.html
Greed will finish us Dumb money becomes dumb only when it listens to smart money
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Rank: Veteran Joined: 3/25/2010 Posts: 939 Location: Nai
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Nyali looks weird of late. Especially the shree area was just degraded by these apartments. They are poorly designed and are being built haphazardly with no clear guidelines.
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Rank: Veteran Joined: 8/30/2007 Posts: 1,558 Location: Nairobi
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@ MV that link u sent me is for "Sandton Area" sorta like How there is Muthaiga & new Muthaiga. Sandton city, flats are the prices what I quoted. http://www.pamgolding.co...order%3dpricedescending which is at 7.5m rand for a 3 br. Also the link that u placed on your last post is of a flat in SANDTON AREA and it's only 93sq m. For a 3 br??? That's a joke!! That's 1000sqf!!!!! Reminds me of the tiny 3 br flats that are on sale in mlolongo! We have been talking of a"bubble" since year 2003. It's been over 10 years since, yet none of the doomsday prophets are substantiating their arguments with SOLID facts; just rumors, hearsay and half baked "Professional views".
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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mv_ufanisi wrote:Horton wrote:@ Mv_ufanisi. I apologize, I meant 4br flat is sandton http://m.property24.com/.../Listing/P24-100972380. The link is for 14.5m rand which equates to kes 123M. Compare that to Westlands 20-30m. So where is the comparison there????? Yes the govt has short comings but we need to stop blaming the govt for everything. Remember what JFK said "ask not what your country can do for you, ask what you can do for your country." I happen to be quite knowledgeable about the property market in Sandton and I can tell you that comparing oranges to oranges Kenyan properties are way overpriced and unaffordable. For example an apartment that costs 1.5M (14M kshs) Rand fetches about 12,000 Rand a month in rent and your mortgage requirement upon paying a 20% deposit will be roughly 12,000 Rand a month. That means that its waay easier to graduate from a renter to an owner in SA. My main point about criticizing the govt is that home ownership should be seen as a basic need - not a privilege. Turning over such an important sector of human life over to speculators is almost the same as if the water sector was privatized and water was being sold at outrageous prices. If Kenya is serious about vision 2030, the government must move strongly on home ownership and ensure as many of its citizens as possible are proud home owners. That's what leads to a much more stable, secure, clean and stable society. Communities with low home ownership rates ie. primarily rent based such as Nairobi with 70% plus of the population being renters tend to have much worse outcomes in terms of violence, slums, drugs etc. That's what the govt is allowing to happen by not moving in to ensure that a person with a normal job in Kenya can afford to build a home. If things stay as they are even the so called rich who are profiting from this absurd situation won't be able to enjoy their money in peace. @mv mfanisi... Well said. I echo your sentiments too. Am impressed at your deep foresight and understanding of the workings of the construction/real estate industry. The longer Govt keeps sweeping the issue of idle land taxation under the carpet, the closer Kenya will be to total anarchy, Egypt style. The land commission needs to include fiscal economists into the membership so as to enable a broad mindset on how land affects the economy. I like your analogy on water industry above. Its just like a businessman discovering a new method of hoarding air and reselling it according to the markets of demand and supply. If air was to be sold at the highest bidder, to a businessman, this means good business. To a businessman who is foresighted, this wil mean soon people will see the flaws and start to ask themselves why anyone is proffiting from hoarding a product that God has availed to all for free. God has availed land to all for free but only a few capitalists gain from this. In developed world eg South Africa, USA, Denmark, most of Europe, its un heard of for people to make money thru speculation on land. This only happens in 3rd world countries with flawed land policies. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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After scientifically calculating the effect of increase in rent when land price in Nairobi is doubled to kes 600,000,000 per acre, am finding out that there is very insignificant rent increase and profitability. In other words, if land price is hiked to kes 600m per acre, no change will happen to rent. Profitability will only be jeopardised if land price hits 2.8 billion per acre. This will happen in 2030, 17 years , if you calculate using the current appreciation rate of 50% per annum. Check calculations here http://www.a4architect.c...nd-prices-appreciation/
We can now comfortably say that for areas where buildings are allowed to go to 10 floors and above, no much change and increase will happen to rent. Once Kenyans learn to build and live in apartments, looks like it will be ok. This high land appreciation will affect people who intend to build/buy bungalows/maisonettes on 1/8th plots eg kitengela but not people intending to build/buy apartments. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Veteran Joined: 8/30/2007 Posts: 1,558 Location: Nairobi
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a4architect.com wrote:After scientifically calculating the effect of increase in rent when land price in Nairobi is doubled to kes 600,000,000 per acre, am finding out that there is very insignificant rent increase and profitability. In other words, if land price is hiked to kes 600m per acre, no change will happen to rent. Profitability will only be jeopardised if land price hits 2.8 billion per acre. This will happen in 2030, 17 years , if you calculate using the current appreciation rate of 50% per annum. Check calculations here http://www.a4architect.c...nd-prices-appreciation/
We can now comfortably say that for areas where buildings are allowed to go to 10 floors and above, no much change and increase will happen to rent. Once Kenyans learn to build and live in apartments, looks like it will be ok. interesting....just read the article on the website briefly, and it seems we are good for sometime......
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@Horton, very interesting. I did not expect the kind of results but mathematics never lie. Looks like we are yet to see jaw dropping prices on urban lands in Kenya. Until 2.8 billion shillings per acre is reached,around year 2030, its still profitable to buy 1 acre of land around nairobi cbd for any price between kes 300m to kes 2.8b. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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Looks like Real Estate investment in future will only be achievable through REITS since individuals will be totally outpriced. For example, to construct a 1 acre office block in cbd, 10 floor levels, this will cost about kes 2 Billion including land, hence only possible through REITS whereby hundreds or even thousands of people pool resources together to achieve this. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Member Joined: 7/17/2011 Posts: 627 Location: Mbui-Nzau, Kikumbulyu
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the work permits debacle makes a dent on the upmarket rental demands..new frontiers open up in the north new kind of expatriate ...oil riggers roughnecks et al that will be the trigger
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@wanyee..true...with oil in turkana and other mineral deposits around Kenya, land price will continue to rise. From my calculations above, even without these minerals, land price will still be sustainable with the 50% annual appreciation rate till 2030 since land is a very small fraction of the cost of a high rise building. As Iron Sharpens Iron, So one Man Sharpens Another.
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Bubble bust..... myth or reality?
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