Land firms in Kenya change tack to make sales

Land sellers have been forced to adjust payment terms to flexible instalment packages to beat the harsh economic times.

According to a research conducted by Property Reality Company (PRC), 81 per cent of all land-selling firms now allow instalment purchases, with 61 per cent of them letting buyers pay within three months and 21 per cent within four to six months.

The firms have also partnered with financial service providers to advance credit to potential buyers at affordable rates.

"One of the major hindrances to land purchase is access to funds, with 55 per cent of respondents citing it as a bottleneck. Thus, to increase the number of people who can have the ability to purchase the property, having an instalment plan is key," said PRC General Manager Abraham Muriithi.

The research, which surveyed 660 respondents in Nairobi and its environs, shows cost is a critical consideration factor in the purchase of land across all Low, Mid and High (LSMs) markets.

A review of land prices showed the value of an eighth of an acre in Ruaka more than doubled from Sh8 million in June last year to Sh18 million this year.

This was the highest jump in 12 months followed by Kiserian, whose average prices for an eighth of an acre rose from Sh600,000 to Sh850,000.

This represents a 42 per cent jump while in Utawala, the value of a similar piece of land rose by 32 per cent, from Sh1.1 million to Sh1.4 million.

"On average, the value of land increased by 17 per cent during the two periods under review, with Ruaka recording the highest price increase of 125 per cent with an eighth of an acre retailing at an average price of Sh18 million, up from Sh8 million," said Mr Muriithi.

The PRC report also indicated buyers were increasingly concerned about whether the parcel of land on sale had beacons, roads, electricity and water.

"Beacons are more important than access roads because they demarcate the individual plots in a property. When developments occur within the property, for example construction of houses, that is when access roads within the property become important," said Mr Muriithi.

PRC says the report is aimed at enabling all the participants in the land-buying process make better and more well-informed decisions.
Currently, there is an information gap as concerns the current price changes in land.