Probably you've been wondering why you long stopped thinking of buying property within the city's precincts....or maybe why the so called bubble isnt letting up just yet....read along and you will wonder no more..

Case one
Just last week a client of somali descent(warlaloh) walked into a renowned Real Estate company with the intention to buy a particular apartment in Nairobi's Kilimani area.The asking price was 11million.On being told this the client asked to be taken to site for viewing.After viewing the property,the somali..oh! sorry,the client started bargaining as is the usuall case.So after a session of haggling there was a mutual understanding 9.5m was to be the price...what followed next defied the agent's experience and imagination.....The client flashed out the 9.5m in bundles of 1000k and foreign currency...well about what followed your guess is as good as mine.

scenario 2
In the month of December a city resident owning a house in Karen hardy was approached by the an African of Somali descent....u guessed right! they wanted to buy her house.But apparently they faced stiff resistant from this woman who had attached sentimental value to his house.Going by market rates the house would ask for something in the region of 15m which our good neighbours offered.

The woman showed no keen interest and infact told them off.They even offered to double their price but she had non of it...snd so they went.After one week the woman was left speechless when the clients called and told her they will give her triple the price...everyone has a price and so was the woman's sentimental fixations.She gave in and yes the somali are now the prowd occupants of that house.

Now you know where the 45Billion revenues from piracy(according to the unaudited accounts for the year ending 2009) go to.....and you probably know why you wont be able to buy property in the city if the trend is not curbed...unless you venture into piracy yourself.

@zakumi, sorry to say but you are exhibiting a shortage mentality. If another person buys a house for 10m or 50m, does that make you poorer? Does it mean the land gets finished? Just buy what you can afford then sell it to them for tripple the price.

@Sparkly,...shortage mentality!!! how so now?? educate me....anyway probably i would have said as much if i didnt have the facts and prerequisite deductive skills within my grasp.

I was hoping that you would see beyond the fine print above but then again that was just hoping...By now i know you understand that price and demand of any commodity are positively correlated...so we have a scenario whereby a few distinct individuals with lots of cash from unchecked outside sources introduce this cash in the property submarket(in this case within particular city estates)...whats more,these individuals are willing to part with any amount of cash,irrespective of the market price,if only to acquire the properties they want.

So eventually the house prices and rents shoot up because the equilibrium is adjusted upwards.

Your argumant can only hold if these cases are few and isolated but im sorry to say that they are increasing at an exponetial rate,i mean 45billion is about 10% of our national budget and to just assume it like that is a recipe for disaster.

Let me give you one perfect case in point...In south C houses that were asking for 5-6m about 3years ago are now going for not less that 8.5m(the cheapest fyi)and lets not even get started on which are the predominant residents in this nmeighbourhood.

When some one says this sort of thing, be very careful with them.

Do you not remember what happened during Kenya's PEV? Married couples from opposing tribes separated because their families were fighting. I am sure before the PEV there were people claiming that "in fact, my in-laws are tribe X"

Reminds me of caucasians who say they do not care about the colour of a person, be they black, white, blue or green. It leaves me wondering where they saw blue and green people!

Zakumi, i think most of the readers here are failing to see the reason and how the scenario's you have discribed affect them directly. I repeat there is no country in any civilised world where some one just walks in and buys property. He or she must show the sources of such money and / or simply money must go thru the banking system.So if Kikuyu's Luos etc are buying the same property one can simply trace the source thru the banks and acertain whether its proceeds from crime or not.

Another point, some one tried to argue that even the swiss have stolen money in their banks/ yes they do but such money is only kept in a swiss a/cs but cannot buy used to buy property in Switzerland.

look at the property market in Kenya against the average wage of Majority kenyans,then you will notice that average kenyans simply can not afford to buy houses in their own country.

And what are fundemental driving property prices? zero viewed from service delivery point of view. Take for instance Karen, why would someone buy a house here for 40m, no sewer system,no runing water, no security, no rubbish collection and you pay a service charge equivalent of a mortage repayment. And when would one recoup his/her investment on such property asuming its for income? probably never in hers/his life time.
Dear Good people with that i believe there is need for the Government to rethink this piracy money issue.Remember these people were actually not buying this properties before piracy, take it or leave it that is the hard truth.

I totally agree that laundered money has contributed a great deal to the superfluous property prices in Nairobi and the ripple effects being felt in its suburbs. Why else would a piece to plot that sold for 200k two years ago, go for 2M today. However, those waiting for the bubble to bust will only find themselves priced out of prime Nairobi. The prices are not coming down because the bulk of the transactions are done on cash basis even the legit ones. I’d rather grow sukuma wiki on my 2M piece of kaplot than sell it to you for less than the dang thing cost me, bubble or no bubble.

Some of us here think that money laundering is only related to piracy. It is broader than piracy. Also, most of this deals passes through the banks. Most banks now have branches in Eastleigh while 10 or so years ago only KCB was operating there. A good case is Equity bank which is having good business funding those storey buidings coming up in the place. As much as there is money laundering in Kenya banks are not assessing the sources of income for their clients. It is not correct to blame piracy for the boom in Kenya's property prices. Prices are up all over Kenya - Nyeri, Embu, Nakuru, Gsa, Kisumu. BTW I thought the AML laws have been enacted in Kenya, is it helping?

Zakumi's thrust merely highlights that Kenya is a major money-laundering point for funds obtained from piracy, drug and human trafficking, gun-running, organzied prostitution with pimps and other forms of racketeering. Then he used a community that has lately become everybody's punching bag and a metaphor for Indian Ocean piracy- the Somalis. He should not have used the Somalis per se because they are not the only ones who do it - anyone guided by the abnormal profit motive and sheer greed would do it notwithstanding the inherent risks therein.

Granted, real estate transactions are a great way for laundering cash and some Somalis and others have actually done this in Nbi and beyond but there are equally many more avenues of money laundering where u will NOT find a warlaloh. Take Casinos for instance, they are a major conduit for laundering casinos. Its simple, a jamaa simply buys chips with cash and may or may not gamble with these chips and will later trade thses chips for a cheque which maybe in a 3rd party's name - and there, the money is now clean! But how many Somalis do u find gambling in Nbi/ Msa? Kwanza, wa wa wa now the number of Casinos has grown exponentially in Nbi & Msa in last few years and we have one in almost any major street, and believe me they are they are a very fertile place for washing dirty money.

Even purchase of high-end cars, gold & jewelry are good avenues too for laundering cash, as indeed are insurance policies, horse racing, lotteries,etc - lakini bliz, habana yuko wariahe dahani yake hii yote haiye!

Kenyans lets face it, we have a form of naivety that's disabling.
when a basic house on forest road goes for 10m, clearly who is it being sold to?
it beats logic that the middle class who should be buying these houses are now rushing for plots in the outskirts.
why is it becoming impossible for us to afford basic services in our own country?
the people arguing otherwise, have u tried buying plots/ houses in other countries?
our govt is simply unfair to us.
the somali menace is getting to far too fast.
another 5 years will see us more xenophobic than south Africans.

Good people of wazua, before we start pointing fingers lets go back to the basics of economics: price is a factor of demand and supply. The demand for housing by far outstrips the supply! Which major real estate devs have we had in the last 30 years? I cant think of any. The urban population meanwhile has grown 10 fold. So where are all these people housed? Think of the informal settlements and there is fierce compe for the few middle class houses available. The prob is that the gov, ncc and private developers have not delivered. You cant say that somalis buying houses are now more than kenyans doing the same.