Dear Wazua Community,

I am a foreigner living in Kenya for about six years now - never thought I'd stay longer than one, but here I am, now with my very own Kenyan wife and daughter :)

I am considering buying an apartment in Nairobi, but am a little fearful given my lack of connections, and the well known risks of property purchases, esp. as I am considering an off-plan unit. I would greatly appreciate your advice or insights whether this is a good idea in general, and I have a few specific questions below.

Specifically, I am thinking about making an off-plan purchase of a 2BR unit for around 15m in the "ENCLAVE" development in Kilimani (off Dennis Prit) marketed by Hass Consult and developed by "Rising East Real Estate Ltd.". Ground has already been broken. I am mainly interested due to the truly excellent location (close to Westlands, CBD, Upper Hill, quiet, close to shopping & restaurants; next to Palacina Hotel); the aim is to pay it off through rent-income in ~10 years and then keep or resell. I would pay this without a mortgage, so no financing costs.

The developer is not a member of the Kenya Property Developers Association (KPDA), but HassConsult says they have previously constructed the "Skyview" and "Lenox Park" apartments in Kilimani. These bulidings are really the usual mediocre Nairobi standard, nothing like the luxury apartments "Enclave" is pitched as. I am quite concerned about whether the final building will look anything like the prospect renderings. It is essential to me that this will indeed be in the "luxury" category, because with all these half-empty blocks everywhere now, I think the key to commanding a good and reliable rent from the corporate/expat types in the future will be having a really nice apartment which is still relatively rare in Nairobi.

But then, perhaps it is possible for developers to just make a step up, and the architects are Symbion Architects, who seem legit and have done some nice apartments.

I've checked their permits as much as I can, but I am really wondering:

1. Does anyone know these developers?

2. Should I draw any confidence from HassConsults involvement (even if they only market/handle payments), or has HassConsult also been involved in buildings that never got finished or fell short in other ways ?

3. Is there anything else I should ask the developers to provide to get a bit more security about their creditworthiness and ability to finish this building well?

4. Do you think it would be possible to tie payments to concrete steps in the building development (rather than just have a fixed payment quarterly)?

5. Is it just a stupid idea to buy off-plan because you'll never know what you'll get?

Thank you for reading as far, and any advice you may have.

Thanks for taking the time to respond.

I'm not an expert, but if it works out, and if the property market doesn't crater by late 2017 (intended completion date), I'd expect the completed units to go for at least 20-22m. More importantly, the most attractive units in the higher up floors with good light and a nice view towards statehouse on one side & Yaya on the other will be gone. They claim to have sold at least half of the 96 apartments already.

I guess I will try to meet them face-to-face to get a better gut feeling of who I am dealing with. I am naturally risk-averse, so I am leaning towards not doing it due to my lack of direct connections and solid reassurance. Then again, I am telling myself - no risk, no reward...

Hass is one of the most trusted and professional marketing agent if not the best in Kenya.Having them on your side as an agent is a great first step for you.I agree with you that the quality of buildings in Nairobi is sub par but i guess competition has been and will continue to sort out that problem in the future.Whatever is coming online now is definitely of higher quality/finish than lets say a few years ago.If you have looked hard enough and cannot find a finished unit that is of your desired quality then follow whatever your gut tells you.in most cases your first gut instinct is normally right.I think you have also received very good advice from the above posters on checking who the financiers are.I put a deposit for edenville II in 2012 and they have never broken ground until today and to add insult to injury they wanted to refund my money if i didn't agree to their new terms which meant that my buy price has gone up by 3.5 million.Someone above mentioned time value of money. By the way Hass is their agent and mine too. they told me there is nothing i can do if i don't agree to the new terms.

Thanks itz for taking the time to respond. I guess another advantage is that the building process has already started (at least excavations). Of course, one looks at that unfinished YAYA tower and shudders...

Thanks also on your feedback on Hass - which seems a bit ambiguous - good in general but in your case not much help with dealing with a rogue developer.

I know the developers they are good guys but apparently this is their major development so everything that can go wrong will go wrong anyway. They have deep pockets you am assuming they arent looking to use the deposits to fund the construction. You havent told us how much deposit you are putting up but my redflag would raise if its more than 10%. If u have kes15m ready you can immediately buy a massionete in the emerging property hotspots of mombasa road say like the greenpark 13MILLION which was 9m less than 2 years ago Riverine kitengela 4 bedroom massionettes by Alexander Forbes retirement fund 15m Yamin park 15m semi detached townhouses was 11m in 2014. Shaba village syokimau. These are developments that are 80-90% done and have sold over 60% actually greenpark almost 95% sold. The reason why townhouses continue to have a higher margin price increase than apartments is because there is very little primeland left whatever is left is selling like gold. There is a huge chance the Enclave will deliver good quality on time but there is also that possibility of things going wrong and Since you can pay cash 15m i bet by the end of 2017 the house you buy today will gain 3-4million guaranteed value and with 19m you can walk around and buy your ideal apartment either from the enclave or a similar development without being a guinea pig for their first major project

I dont get it! How is Hass "the best and most professional"after you got shafted on edenville 2?

@user1985...

You may want to consider exchanging your USD for shillings now and investing in short term treasury bills while you shop around for the best real estate deal that is suited to you. After all, buying off plan you will only need to deposit a relatively small percentage of the total price of the property you intend to purchase.

The USD/Ksh rate appears to have stabilised around the Kshs. 105/- plus range, while IF the trend of the last T/bill auction persists you will obtain north of 18% p.a. in yield. Food for thought....

Thank you everyone for these replies, really very helpful and much appreciated!

As for the deposit - they are actually asking for regular payments (as in ~20% every quarter or so). However, I already told them I don't like that, after all, I don't want to keep paying Hass Consult (who then release it to the developer) no matter what is going on with the building site. So I've indicated that if I did this, I want to pay 20-30% as deposit and 70-80% on completion deal, though they may ask for more money in that case.

I am surprised that apparently 10% deposit is more usual? Is that also true with higher-end developments? I know the deal offered by the nearby Purple Haze development from Edifice is also either regular installments or 30% upfront and 70% on completion (but the latter is 10% more expensive).

My impression was also that the developer has not yet completed a project of this high-end nature (their reference buildings are Lenox Park & Skyview which are ok, but not more), so the point that even if they genuinely try, their inexperience may be a problem and cause issues, is a fair one.

The apartments from developers with a proven track-record of building very high-end (e.g. Spartan Developers who did "The Lofts" on wood avenue) are also more expensive e.g. 26m offplan for a 2BR in their newest, so one wonders if the Enclave can really afford to be so nice if they price their 2BR a full 10m lower.

My $2 Zimbabwe advice
- Unlike stocks, in real estate, you are better off investing in what you can see. Take time and drive around, you will be surprised at how many already completed apartments are up for sale (That meet your specifications).
- Investing in a ready apartment is important because you will start collecting your rent immediately or within a short time. However, you may have to realize that the pay back period for high end property is relatively long.

10 years??? And nobody got shot???

I bought a plot (part of a bigger piece of land) and was promised the titles would be processed immediately. I was later informed by the lady owner that the land had boundary issues they hadn't noticed for years. The immediate neighbour had his land encroached by a second neighbour and he encroached on hers. The first surveyor was a joker and did not notice there was a problem with the land. They later realised what was on the ground was not the same as what on the paper! They engaged a new surveyor who noticed the problem.

It became a long back and forth since the second neighbour had already sold his land to a third party who did not want to hear any of it. It took a couple of years and monetary of course to sort out the issue.

Then the son in law of the owner tells me I have to add some money because they had spent money to sort out the issue or they refund my money because the going price had quadrupled anyway (since I bloody cleared my payments!!!) and what they were asking me for "was reasonable". I almost shot the son of a b!tch!!! The lady had to cool me down!!! I can only imagine if it was a house and the delay was 10 years!!! Kwanza for a fellow using a loan knowing very well he will not be paying rent and can therefore survive the loan repayments!!!

Haki maneno ingine ni stress tupu!!