My expert opinion.

In September 2007, I was at Safaricom for a job interview, and I remember them asking me - as someone who's done a lot of IT in real estate - where the property boom is leading. I told them there is no property boom like everyone is talking. What is there is land speculation and property overpricing, and they laughed in unison, then stared at me blankly - I think they though they had been conned somehow since they looked well off.

At that time, the market rate for a 2 bedroomed flat was Kes. 3.5 - 4.5 million. Today, you will be lucky to find one going for Kes. 8.0 million unless I take you to NHC (National Housing Corporation), a government subsidiary. 

I have never understood why prices are going high every year. I am both an economist and an IT specialist by training, and despite the more than 6 years in the property industry, it baffles me too. I just can't find market fundamentals to justify a flat going for Kes. 12.5 - 18 million (a flat, without land for parking a car or safe playground for my kids).

By contrast, the rents for commercial activities have been showing a predictable trend thats commercially convincing. In fact some people are converting houses and apartments in places like Hurlingham into office space because its no longer viable to house people next to a place where real commercial activity is going on - being that residential incomes thin out while commercial incomes surge upwards in such a locality.

I have hard a working relationship with property valuers and what they simply do is take cumulative purchase values for a certain place and do an average . There's a formula thats industry specific. Thats what banks will lend to you to purchase the land or property. Most of the time some monied person comes around and buys a house or land at 3 or 4 times its price in the neighbourhood. When the valuers compute the next index in that area, which is likely within a month or two, they have to include the inflated price, the location will soon show a massive increase as the values cascade the property values. 

Guys, sometimes I regret why I didnt use my "Chacha" to purchase  land or get some mortgage. Land in my neighborhood used to cost Kes. 25,000 in 1999 when I was still in campus. That was for an acre. Then, there were no apartments there. We now have many houses there as we speak. Today, if you don't have Kes. 3 million or more for a plot, forget it.

Anyway, the way I see things, land will NEVER be cheap. With the surging population, Skunkers had better start purchasing land whenever they can find an affordable piece. The future is going to be very hard. Even arid areas like Isiolo or Laikipia will start experiencing surging prices with the Internal Container Deport and the high speed railway to the Sudan's and Ethiopia being constructed around Mt. Kenya, and the Lamu sea port opening up development in the arid north. Soon, the arid areas will provide the engine of development.

I have watched land and rental prices escalate countrywide, and from my predictive indices, its going to be endemic, countrywide, in four or 8 years from now.

So stop whining and use whatever income you have to purchase property before stuff runs out of your means. If you are like wahindi's, start investing in real agribusiness as the surging population will need food to eat. You only need to lease land in the great rift valley, you don't need buy it.

My thoughts.

Peter