FACTS AND FIGURES
- There is a demand of over 100,000 housing units annually in Kenya
- There is a supply of only about 20,000 units
- Population growth is projected to grow exponentially in Kenya over the next twenty years or so
- Available land that can be used for agriculture and settlement is slowly declining due to desertification
- Hardly any feasible land reclamation methods have been implemented
- Most people in Kenya made their first million after selling land
BUSINESS OPPORTUNITY
The business opportunity here lies in land speculation. Forget about the housing units. Leave that to the experts a4architect et al. With a capital of Ksh 24 million, you can speculate in land and make more than 12 million annually which when divided by 12 months equals 1 million per month. Do not forget that you can lease out the land to e.g a person who wants to set up a greenhouse as you wait for the land to appreciate. The rents from the pieces of land could cater for your land rate costs etc.
ADVANTAGES
- Limited downside. Hardly anyone loses money from land speculation. The worst you can do is break even. Just make sure you buy land around Nairobi, Nakuru or Kisumu.
- Multiple sources of returns. You can earn rent from the land as you wait for it to appreciate.
- Extra-ordinary returns if the deals are executed well. Just make sure you assess the potential of an area. Avoid developed areas and go for developing areas with an increasing population. Some plots around Nairobi have seen their prices triple in a matter of months.
- The passive nature of the investment. You said you need a passive investment. Land speculation is a passive venture hence it will suit you.
DISADVANTAGES
- Conmen/women. Due diligence is a must.
- Illiquidity of the investment. This one depends again on where you buy the land. Buy in a developing area in a major town or city.
- Expensive nature of research and problems getting reliable information.
SOLUTIONS TO DISADVANTAGES
- Engage a lawyer who understands conveyancing in addition to doing due diligence on your own.
- Buy land in developing areas where the demand for land by real estate developers is likely to go up. Remember these are your prospective clients. This will reduce the illiquidity problem.
- Expensive research costs can be greatly reduced by good use of the internet. The internet could be used to search for a number of prospective locations to buy your land. Use elimination methods such as prioritizing according to population growth, your budget,expected and ongoing developments in the areas etc. Once you have five different locations, you can now incur the transport costs to these areas.
JUST A THOUGHT