By EVELYN SITUMA
When an opportunity to own a piece of land in a gated high-end estate along Thika Road came up, Steven Njoroge quickly secured a plot.
His driving motivation was to own land in a prime location. A place he could settle on later in life.
It’s been two years since he made the investment at Thika Greens and he is excited at the immense value the land has gained over the period, attracting both local and diaspora investors.
One of the main things driving the value of his land up is the heavy investment by the government on the Thika superhighway.
“I bought my plot two years ago and it’s now worth 1.5 times the buying price,” said Mr Njoroge. “This means that after constructing, the property itself is set to be worth more than two times my initial capital investment.”
He is among the investors celebrating the gains from the infrastructure development.
“Some of the serviced plots sold six months ago are now worth 1.5 times their buying price and we expect the return to rise rapidly as the project infrastructure and golf course is completed before the end of the first quarter 2013,” said Charles Kibiru, co-founder and CEO of Thika Greens Limited.
Mr Kibiru contends that the close to double capital value has also been driven by increased interest in affordable luxury living and the unique lifestyle the development promises.
Thika Greens houses an 18-hole golf course, a three star hotel, an office park, a shopping mall, community centre, retirement village, schools, a hospital and a police station.
It is indeed true that investors have often tended to make investments in areas they foresee opportunity and infrastructure development.
Mark Odhiambo is one of the investors who bought a house in Kiserian, with government development plans in the area in mind.
“The government had said it was going to open Nairobi southwards with a railway line from Magadi to Tanzania,” said Odhiambo.
The blue print by the government made sense to him and he bought a three bedroom maisonette in a soon to be opened up area.
However, two years down the lane and as he makes final payments for his mortgage he cannot boast about the value of his investment appreciating like Steven’s. Odhiambo is a disappointed man.
The railway line plan has not kicked off, the first phase of the water supply project, courtesy of World Bank, has only just been completed and residents are waiting for the first lot to get piped water.
Meanwhile, he has to do with piped bore hole water, for which he parted with Sh30,000 to get connected and stills for consumption.
“We were surprised that the Thika Road project was executed before the Magadi one. Then Syokimau project; the Mombasa road project was also fast. Now the government has considered Langat Road,” says Odhiambo, with a resigned look.
He says he readily bought in the government development plan because he thought he would easily access the city centre but that has turned into a nightmare. He spends almost eight hours on the road, daily.
“I did an economic evaluation on Kiserian before I settled in contrary to investors who just wanted to own something. My failure was I couldn’t see the bumps,” he admits of the challenges he has faced.
Fed up, some of his neighbours have abandoned their homes and moved to areas closer to town like Karen. “As a result, the cost of land in this place is now falling.”
As Odhiambo gazes at his neighbours who are leaving, he continues to clutch tightly on the hope of finally getting piped water. Perhaps this will somewhat relieve his pain and save him money as he waits for the promised dream to manifest.
Ben Woodhams Managing Director at Knight Frank Kenya, a real estate management company, says investors who peg their decisions on government development blueprints often risk losing all their investments in case such plans are shelved or disregarded altogether.
He urges them to conduct proper market analysis on targeted areas for sustainability and gains before making worthwhile investments.
“The government has no magic wand to make the economy grow. All they can do is give incentives and they are doing well at that,” says Mr Woodhams.
However, incentives or no incentives, Mr Woodhams advises potential investors to look at the viability of investments in areas they have settled on.
Nonetheless, he is quick to point out that this is in no way guarantees gains.
The point is, always have it in the back of your mind that, there are times the government might push through with its project fast, delay or abandon.
Just make sure no matter what happens, your investment is not lost. Therefore, weigh your decision carefully.
Posted Thursday, January 17 2013 at 14:45