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Nairobi slum landowners reap from joint ventures

REAL ESTATE
By James Wanzala | August 4th 2016
The Kangemi slum photos, the slum is now attracting gated communities developers through Joint Ventures hence transforming it from slums to gated communities. (PHOTO: COURTESY)

For a long time, ancestral land on Waiyaki Way in Nairobi belonging to residents of Kangemi who are mostly Kikuyus was not to be sold since culture forbade them from doing so.

The ones who had no financial muscle would just build iron sheet structures for rentals. Some would just plant crops on the land. However, a new wave is sweeping across the area, thanks to the realisation that selling land or doing joint ventures with developers to build modern gated residential units could change their fortunes.

Areas like Uthiru, Kangemi and Kabete are now embracing this idea and experts say soon, the shanties associated with the area may soon disappear, giving way to gated communities and link up with nearby posh estates like Lavington.

Many of those who have entered into such partnerships are now reaping the fruits. “It is true many land owners who have no capital to develop such huge projects are now partnering with the developers to put up such gated communities and Waiyaki Way Ridge such developers,” says James Mwangi, property manager at Olive Joy Care Properties Ltd.

He also mentions Kenya Power’s project in Kabete, where the company is building two and three-bedroom apartments as another landmark project within the area. The land the project is occupying initially had shanties.

The areas have become prime locations and are being targeted by developers who want to put up modern housing units to accommodate the city’s middle-class. According to HassConsult’s land price index, the average land prices in the 18 Nairobi suburbs increased by 2.5 per cent in the second quarter of 2016. That change in land prices affected places like Lavington and Kangemi. On average, an acre of land cost Sh224.2 million.

The number of expatriates in Kenya has grown in recent years as a result of international companies setting up operations in the country, according to real estate marketer Lamudi. This has led to increased demand for residential real estate, with employees looking for accommodation near work. Kangemi is a 15-minute drive from Nairobi’s city centre.

According to Mwangi, the price of a quarter acre five years ago was Sh5 million; that now at least Sh50 million for land that touches Waiyaki Highway.

Daniel Ng’ethe, who has lived in Kangemi for 16 years, has seen the area change from a ghetto, as he calls it, to gated communities. “Initially, land was owned by conservative elders but when the ownership was handed to modern generation of sons and daughters, they are now selling the ancestral land to investors to build gated communities and maybe buy land elsewhere,” says Ngethe, who deals in transport and collecting rent on behalf of some landlords in the area.

Ng’ethe says in 10 or 15 years, Kangemi slums will be no more. He adds that the developers are mostly constructing two- to four-bedroom units, with hardly one-bedroom units.

He says just over a decade ago, rent for a one-bedroom unit was going for between Sh10,000 and Sh15,000. That has since increased to between Sh30,000 and Sh40,000, while a two-bedroom unit goes for between Sh40,000 and Sh50,000 per month.

A 50 by 100 feet plot in the area goes for between Sh50 million and Sh60 million and an acre is costs between Sh150 million and Sh200 million.

Christopher Thiong’o Waweru is one of the landowners in the area who have entered into a joint venture arrangement with Waiyaki Way Developers to construct Waiyaki Ridge Gardens, which will comprise 204 apartment units of two- and three-bedroom on 2.3 acres that initially had 300 semi-permanent rental houses from which he collected between Sh150,000 and Sh250,000.

“Many tenants would at times not pay rent on time and we often end up at the chief’s office to solve cases of unpaid,” says Waweru, 50, and a father of four.

But with the joint venture, Waweru is confident of earning good money from the units once ownership of the units are transferred to him. (He is entitled to a certain number of units, which the company will sell on his behalf.) He estimates that the land can fetch about Sh400 million at the current market value. “The idea is working and already two of my friends are also considering going the joint ventures way,” Waweru told Home & Away.

The project is not far from Mountain View Estate, one of the new entrants in the area, targeting the middle-class. It is the second project by the developer after Overview Apartments in the same area. Other new modern projects in the area include Jabs Flats and Trinity Heights.

“We want to change the face of this area by doing away with the shanties and putting up modern apartments and at the same time improving rental incomes of the landowners,” said Waiyaki Way Developer CEO Peter Maina.

According a landlord in the area by the name Wainaina, Kangemi is changing for the better, shanties give way to good modern houses. “Thiong’o Road, which is currently under construction and starts from Waiyaki Way to Kawangware, is expected to open up the area for real estate development,” says Wainaina.

Edith Waweru, 47, and a mother of two, was born in Kangemi and owns a 50 by 100 plot next to Waiyaki Way Gardens. She said she will not sell her plot but instead look for partners to help her develop it.
Waweru, who was inherited the plot from her parents, said she has seen the area grow from when it was called Native Intermediate Training Depot (NITD) in the 1950s to the current Kangemi.
The growth, she said, gradually shifted from mud-walled houses to iron sheet ones, semi-permanent houses and now gated communities taking over.

“I will not sell the land as our traditions prohibit selling ancestral land but I will look for a developer to partner with and develop rental houses. Currently, I have built iron sheet-roofed academy and a hotel on it,” said Waweru, adding that if she were to sell her plot, she would ask for between Sh50 million and Sh70 million.

The coming of the gated communities in the area, she said, has increased land prices.

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