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New cash: Kiambu’s real estate boom pushes out farmers

REAL ESTATE
By Peter Theuri | Dec 16th 2021 | 4 min read
By Peter Theuri | December 16th 2021
REAL ESTATE

Alma Estate is an upcoming part of Ruaka fast-growing area. [Jenipher Wachie, Standard]

In 2013, the County Government of Kiambu temporarily stopped approvals of change of land user pending the zoning of commercial and agricultural areas.

The then Governor William Kabogo said the move was aimed at safeguarding tea and coffee farms, which were being taken over by real estate in the county.

Eight years later, land in the county continues to fall into the hands of real estate developers.

It was bound to happen. The concrete jungle that has long defined Nairobi was finally going to spill over.

Kiambu’s proximity to Nairobi also meant that competing land use, based on the potential maximisation of what land experts call “the original and indestructible powers of the soil”, would see tremendous changes in land use over time.

“Kiambu borders a rapidly growing City of Nairobi and the spatial spill effects are indispensable. What is happening in Kiambu and other counties bordering Nairobi in terms of land use changes is demand-driven,” says Joseph Njomo, Principal Physical Planner with the County Government of Nyeri.

The story of people selling their agricultural land to developers and then burning their money to end up hopeless paupers is not new.

In Kirigiti, Kiambu, the demand for residential houses amid a rapidly rising population has seen many of the residents who were initially coffee farmers subdivide their land and sell it to real estate developers. Some have chosen to invest in real estate.

“When I realised there was the demand for houses, I decided to uproot coffee on my half-acre of land. In its place, I erected mabati units in the beginning, but eventually developed the entire property,” Daniel Kinyanjui, who was born and brought up in the area, recently told Real Estate.

But the hike in demand has led to substandard developments. Many of the developers do not invest in water or even electricity, well aware that the excess demand for housing leaves desperate tenants with little choice but to take poorly serviced houses.

The collapse of residential buildings around the country is evidence of the audacity of bogus contractors, with many of them not approved by the National Construction Authority (NCA).

Real estate firm HassConsult said in its Property Index for the second quarter of 2021 that Kiambu County has experienced a boom over the last decade due to a combination of infrastructure development and subdivision sales, which has made it attractive for speculation.

The average price of an acre of land in Kiambu Town was about Sh37.9 million, according to the index, well above other satellite towns of Nairobi.

An acre in Ruaka, also in Kiambu, was selling at Sh89.8 million on average.

Satellite towns are located next to major cities and are grown by an emerging middle class and investors seeking less expensive land outside the city.

The housing boom has also roped in other areas that used to be farmlands such as Kajiado, Ngong, Kitengela and Athi River.

“People will see that coffee and tea are no longer performing, so they try their hand in real estate where they feel they can make more,” says Samuel Mburu, an urban planner.

Classical economist David Ricardo suggested that as land attracted a reward due to derived demand, the owners seeking to rent their land would attract maximum rates if their soils supported the growth of a crop that was in demand.

Competition would increase the price of land as renters outbid each other hoping to catch the fever in the market and make profits.

Although Ricardo's model assumed that all that land was agricultural, it explains what has been happening in Kiambu - as house seekers increase, the prices of the land increase.  

As land in Kiambu gets fragmented and coffee loses the battle against real estate, facilities that support the growing population have also come up in earnest.

In Ruaka, one of the region’s biggest shopping malls, Two Rivers Mall, was developed. Tatu City, a project of Russian-based Renaissance Capital, is also nearby on 300 acres formerly owned by agricultural firm Eaagads.

According to the Economic Survey of 2020, coffee production declined from 45,000 tonnes in 2018/19 to 37,000 tonnes in 2019/20. Processing of coffee was also among the activities that posted notable contractions in the manufacture of food products, with a decline of 12.6 per cent.

“Multiple factors affected coffee production such as poor weather conditions in the coffee-growing areas, inadequate application of farm inputs by smallholder farmers and the shift in land use from coffee farming to real estate, among others,” the survey report said.

In 2020, The Conversation Africa website reports indicated that Nairobi city had lost 22 per cent of its green spaces between 1988 and 2016.

“Changes in land cover in Nairobi are mainly due to policy changes – such as zoning – that increase the plot area covered by a building relative to the total plot size," said an article on the site.

"For instance, areas close to the central business district that were residential in land use have seen recent conversions to commercial or office space land use. This changes the landscape."

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