It costs a fortune to put up structures in Maua and Chuka hence an uphill task for investors to recoup on their investments, yet properties here are ever in high demand, writes Maore Ithula
There is no doubt that real estate in Kenya has appreciated in the last few decades. However, in some parts of Meru, price for land is unreasonably higher than anywhere else in the country due to unique factors, experts say.
The most notorious places where land value is overly exaggerated are Maua and Chuka towns. The two enjoy an animated economic activity that is suffused in escalating property prices and a hilly landscape that makes property development expensive.
Oswald Gitari, a conveyance lawyer who operates in the two towns says properties in these urban centres are unduly expensive. Although many high-rise structures spring up everyday in the two towns, Gitari says, the cost of developing the buildings makes it impossible for investors to recoup their money in the conventionally estimated ten-year period.
Says he: "Properties in the two towns are more expensive than similar pieces of land in a larger urban centre like the Nairobi. Besides, it is more than three times expensive to construct a house of certain specifications in Maua and Chuka than it is to build a similar one in Nairobi."
low returns
Conversely, a completed rental property in Nairobi fetches higher premiums than a similar investment in either Maua or Chuka.
On going constructions in Chuka. [PHOTOS: maore ithula/ STANDARD] |
But what makes properties in the two towns expensive?
David Imwati, a Nairobi based structural engineer who has supervised construction of many buildings in the two towns says people of Meru have a peculiar attachment to the ownership of land.
The engineer says: "The sentimental value of land among the people of this area is too high. Here, even people working and living in Nairobi and other major towns are also in the race to buy land in these small towns."
When Home & Away toured the area last week, an acre, which residents popularly refer to as 25 points was going for as much as Sh2 million or slightly higher in Maua town.
The same property within Chuka costs at least Sh500,000 higher, says Gitari.
"In these two towns the craze for getting a slice of the local urban centres is phenomenal. Even if you have the money, it might take you up to a year to get someone selling land," Gitari says.
Interestingly, these are perhaps the only towns in the country where properties are in high demand, yet there are no property brokers on the prowl. But how come the notably uncanny Kenyans are exercising restraint in this case instead of taking advantage of this situation, as they are wont to, in other instances?
Firstly, the lawyer says, the exceptionally high prices are a formidable deterrent to brokers. Then, he adds, many brokers are known to be crooked in nature and people of Meru are famous for roughness when ‘demanding their rights.’
Gitari observes: "When the sale of property in the village involves millions, this is not the kind of information any seller or buyer would be very enthusiastic to share with third parties like brokers. The buyer and seller would rather talk about the transaction after it is complete for their own safety."
Mr Philip Mugambi recently bought ten points (0.10 acres) at Maua’s Kachiongo swampy estate for Sh1 million.
secret deals
"The owner confided in me that he would be selling the property a year ago. But since I did not have the full amount then, I paid him half of it and cleared the balance just last week. Nobody, including my spouse knew about the transaction until we sealed the deal," says Mugambi.
Keeping land deals secret, says Mugambi, kills several birds with one stone.
"First, we keep away this information for security reasons. Second, it is culturally embarrassing for the seller to dispose property and thirdly, it is in the interest of the buyer to remain tight lipped until the deal is done thus locking out competition," he further explains.
"A cocktail of related and dissimilar issues are responsible for property prices increment in these towns," says Gitari.
In Maua, property prices hit the sky about 20 years ago when miraa traders of Somali origin descended on the town occupying every available space under a roof. The foreigners made matters more complicated when they started buying and leasing business and residential premises and miraa farms.
Ten years later, many colleges have sprung up in the town complete with a university college and soon the Maua Methodist Hospital which become Kenya Methodist University’s teaching facility for students pursuing degrees in medicine, he says. As far as the high property prices in Chuka town are concerned, Gitari gives two explanations.
One, he says, is the Chuka University College, which has about 5,000 students. The institution opened its doors five years ago and it is growing in leaps and bounds. Existing buildings cannot meet even a tenth of the students’ demand for hostels and staff accommodation.
Properties within a radius of two kilometres from the college, says Gitari, are completely out of reach to the common mwananchi. The traditional cause of inflated land prices in Chuka has always been its proximity to the entrance of the Mt Kenya tourist circuit.
Tourist mountaineers, says Gitari, pass through the town giving it a fake semblance of a tourist resort, which it is not.
expensive venture
But what conventional factors influence the value of real estate in normal urban set ups? Imwati says some of these factors include location, use, and applicable legislation. He says because urban areas have more allowable uses than rural areas, land becomes more valuable.
He says besides properties being too expensive, the cost of construction in Maua and Chuka towns is too high because of the hilly landscapes on which the urban centres were established.
He says: "It is more expensive to build a structure in Chuka than say, Nairobi because the town is located on a hilly ground thus increasing the cost of laying foundations. Maua town is also set on a similarly hilly ground. The situation in this case is further complicated by the fact that most flat areas are swampy.
Moreover, the cost of raw materials in Maua is also phenomenally high. This makes construction cost in the area about four times as expensive as it is in Nairobi."
The cost of 400ft of building blocks in Maua town is Sh15,000, while two tons of building sand sells for Sh16,000. These materials cost half the price in Nairobi.
