In March 2022, two lawmakers in the US introduced legislation that would require any person purchasing property in New York through a limited liability company (LLC) to “disclose their identity to the state and include the information in their tax returns”, according to the International Consortium of Investigative Journalists (ICIJ).
This was to combat hideous land transactions, tax avoidance and money laundering.
“In New York, a long-time hotspot for stashing foreign wealth, shell companies have been used to purchase luxury properties, allowing the real owners to remain anonymous,” ICIJ said.
Real estate is one of the most potent conduits for malfeasance by the moneyed, and property prices often skyrocket when money launderers join the market.
In 2020, figures from Ethics and Anti-Corruption Commission’s (EACC) showed recovered assets worth Sh29.8 billion, with cash, land, and property from corrupt officials in the financial year 2019-2020 being Sh11.3 billion, according to Basel Institute on Governance.
Another 2020 dossier explained how affluent Kenyans stashed proceeds of ill-gotten wealth into real estate, raising land prices to unprecedented levels.
Prof George King’oriah, a land economist, says that the price of land in Nairobi is “very exaggerated” and “unrealistic”. Driven by wayward speculation, the prices have made Nairobi only affordable to a select few.
There is a huge appetite for land, either for genuine economic purposes or to obliterate evidence of corruption. A huge number of Kenyans are increasingly unable to afford land.
But that also means that investment in land is a juicy prospect for anyone who can be part of a deal.
Nothing in Kenya supports this idea quite like devolution. In the past decade, the value of property has been rising gradually in county headquarters as businesses mushroom to support the governments.
And land prices have been increasing.
Nakuru goes one better. Promoted into city status in December 2021, it is set to attract huge investment as the first town in the agricultural-rich Rift Valley region to gain this prime status.
The metropolis is also among 49 cities that recently joined United Nations Educational, Scientific and Cultural Organisation (UNESCO) Creative Cities Network following their designation by UNESCO Director-General Audrey Azoulay in November 2021.
“These cities are recognised by UNESCO for their commitment to place culture and creativity at the heart of their development and for sharing knowledge and good practices. Nakuru joins the Craft and Folklore Category, a reflection of the rich folk arts of communities living in Nakuru,” reads the official UNESCO site.
UNESCO Creative Cities Network (UCCN) was created in 2004 as a platform to promote cooperation with and among cities that have identified creativity as a strategic factor for sustainable urban development. Cities that join this network work together towards a common objective: placing creativity and cultural industries at the heart of their development plans at the local level and cooperating actively at the international level, UNESCO says.
Land sellers have been falling over themselves advertising “mouth-watering deals” in and around the city, rightly promising hefty returns.
Username Investment, a real estate company, says Nakuru is set to benefit from “a growing industries base, positive demographics, planned expansion of Nakuru – Nairobi highway, upgrading of an airport, revival of the railway line, the city redesign plan among others.”
“The real estate market has not been left behind either. We all know that the property market is influenced by demographics, interest rates, government policies and a growing economy. Nakuru real estate market is not an exemption,” Username says.
Buyers are closing in on deals as soon as they can.
Largely a buyer’s market what with supply outstripping demand, especially in housing, the real industry sector in some of these county headquarters is changing into something of a seller’s market, with investors keen to have a piece of the cake as it gets sliced and dished out. They are paying top dollar.
Herein may lie “dirty” money, and speculation could already see prices highly escalate, but the land will certainly remain an attractive investment for many. Its price can only rise.
Agriculture in trouble
In a recent interview with The Standard, Rhino Mabati CEO Andrew Muriungi said that devolution was enabling companies to create a footing in towns where they had struggled before, taking goods and services closer to people and creating room for collaboration with other businesses, and governments, and consequently an improvement in access to amenities.
“There is more money in the counties, and investment is only going to grow. So we can see more people going to such places and setting up industries, settling there, and developing the devolved units,” he said. “Industries are leaving Nairobi.”
Experts also feel that once it hits top gear, devolution will ease population pressure on the city, which has grown to over 4.5 million by day (2.7 million people live here, according to Statista, while the second most populous city, Mombasa, has 800,000 inhabitants).
Bursting on its seams and likely to cannibalise secondary nodes that feed traffic into its heart, Nairobi could be a huge beneficiary of devolution. And with a focus on setting up industries and settling elsewhere, the prices of land in Nairobi could stabilise as other towns sell like cake.
World Bank data shows that while Kenya is heavily reliant on agriculture, only around 10 per cent of its land is arable. According to the International Trade Administration (ITA), agriculture dominates the Kenyan economy, accounting for 40 per cent of the overall workforce (70 per cent of the rural workforce) and about 25 per cent of the annual workforce.
Yet land sales in the country, especially around the urban regions, have been to create space for expansion of real estate, extinguishing agricultural activities.
It is the increase in population that has spurred the need for housing in Nairobi, leading to an upsurge of development projects within the city and its environs.
Land that was traditionally agricultural is quickly being turned into concrete jungles to house city residents. Suburbs have been growing at an alarming rate.
In Kiambu County, tracts of land that were under coffee and tea have been converted into residential estates.
This trend might trickle down to county headquarters, with parcels of land formerly used for farming and which just about touch the towns, getting converted into residential, and commercial, properties.
Small-scale farmers, often disenfranchised due to lack of proper returns, could be willing to cash in, and for a city like Nakuru, the allure investors have could lead to an increase in land prices to unimaginable levels.
In 2013, Agriculture CS Felix Kosgey wanted to suspend change-of-land-use approvals in coffee and tea growing areas in order to safeguard cash crop growing zones.
The County Government of Kiambu then temporarily stopped approvals of change of land user pending zoning of commercial and agricultural areas.
An influx of investors in county governments could see the devolved units resolve to stricter enforcement of laws to prevent real estate from monopolising land use.
But before then, or even then, the price of land will keep rising as population increases, fragmentation worsens and new frontiers are explored, with investors certain to reap way more than they sowed.