Kiambu rd runda,muthaiga,Nyari(on the other side) are the only true suburbs in Nairobi.They are well organized with proper services and if you buy a plot and build you are sure your neighbor will build an equally good house so the class is maintained.There has been a similar topic this week on who buys this expensive plots,now you know what drives their thinking.It not necessarily the quick return but the quality of living.The bubble will not burst as hard in this high end area unless county gvts come up with comparable suburbs.So far i dont see any with a serious vision.
On the upperhill plot, i have seen that 390 mil plot and its the same thing again.Where else in Nairobi can you put up a building in high end classy area,not unless tatu city becomes successful i expect this prices to remain elevated.

dont get me wrong boss. its a good idea that our policy makers ought to think about. in the meantime, let us speculators make hay while the sun shines!

@metasploit..
In US,Australia and Europe, the citizens threw the financial burden to the banks. Banks threw to insurances who threw to Govt.

In Kenya, these guys with property loans can not default and throw to banks-they will be slowly squeezed in a symbiotic method.

I saw Hon. Midiwo has fronted a bill to cap rates to Base lending rate + 4%. This will help slightly if passed.

Its more of a panadol effect on a cancer patient..full solutions lie in land reforms such as LVT.

@tiggertiggy..ok.ok..
Let speculators make hay while the sun shines.
Its good for me to show speculators[me included] the science behind this increase in value and its long-term effect on the economy. Such info is not easy to get.
LVT can not be actualised in Kenya coz the policy makers own most of the land and the voters are not well-versed on matters land/economy hence easily swayed politically.

My prediction is that land speculation and over value will continue for the next 20 years. By then, there will be a critical mass who will understand and come up with solutions to this.

@jamplu..the middle class buy coz the location is near their place of work,mostly Nairobi CBD. The high class can live anywhere. The low class live near their workplaces e.g Kibera,Mukuru e.t.c.

As long as situations are such that there are no new lands opening up to accommodate middle class housing, they will still buy even though it means spending 99.99% of their income on housing.

Couples will share the cost with each partner contributing say 50% to make it to 100% of average single person middle class income.

I am a developer and I can tell you it is getting tricky. We normally want to do projects whose turn around time cannot exceed two years. As soon as it goes past this, the developer will have paid too much interest. The trick then is to sell fast enough so coz banks will only allow you several months where u only pay the interest as you develop. If you happen to finish the development and you have not sold enough units to repay the loan, then you are in trouble.

The biggest handicap now is making sales when rates of interest are very high coz this locks out so many people. The overall net effect will actually be less demand, less prices for the unit but we really can't sell below the costs of construction inclusive of the land. the soft landing is to re-negotiate with the bank to extend the interest only period, otherwise we may end up defaulting.

Right now, we are mostly targeting the bank staff and people who can access cheaper credit. Tough times but our prayer is that the rates will go down soon.