High land prices are forcing dealers in Nairobi and surrounding areas to cut down on their acquisitions as most people cannot afford the inflated prices. Brian Mwandawiro of Amani Real Estate Agents Kenya, for instance, says they slashed new acquisition of land by 35 per cent to 40 per cent because of low demand. “Some industry players have been inflating land prices, thus scaring away potential buyers,” said Mwandawiro.
Buying and selling land has been a booming business for the last 10 years. But now, many land buying companies are grappling with low sales due low demand caused by inflated property prices. David Ngao, an agriculturalist in Kilimambogo in Machakos County, who manages a farm in the area, and has been interacting with a number of land buyers who come for site visits, says he pities such investors because they are being overcharged by land brokerage companies.
“Here, an acre goes for Sh120,000 if you buy directly from a land owner. On the other hand, you can pay as much as Sh150,000 for a 50 by 100 feet piece of land in the same location if you buy from a brokerage firm,” says Ngao.
In its 2012 Wealth Report, real estate management company Knight Frank ranked Nairobi as the fastest-growing real estate market in the world, outpacing cities like Miami and Monaco. This was at a time when real estate agents were in the middle of their honeymoon, enjoying the boom in business.
However, the honeymoon now seems to be coming to an end with competition in the once lucrative venture seemingly becoming stiff. “Kenyans are becoming more and more informed. Some are searching for information online while others are getting consultancy services, making it hard for them to be duped into buying,” says Mwenda Thuranira, the CEO MySpace Properties Kenya.
In the third quarter of 2016, Hass Consult reported that on average, land prices in 18 Nairobi suburbs increased by 1.4 per cent. The increase was the highest ever since 2014.