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The most common narrative in Kenya’s real estate these days is the dishonesty of off-plan developers.

Stories of disgruntled investors who have lost considerable fortunes have dominated social media, with Kenyans calling out unscrupulous developers who sell air to hapless buyers.

The real estate firms are infamous for offering lucrative deals that gullible enthusiasts could die for and then striking killer blows by failing to keep their promises.

For those that deliver, they often render substandard structures, and even then, after eons of tug-of-war with investors.

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Many firms have found themselves embroiled in ugly court battles as they bid to buy time to continue playing hide-and-seek with their clients.

And even in spite of ugly stories of swindled investors dominating airwaves, potential property owners keep on falling for cons’ traps over and over again.

One real estate developer has been in the news for months, having sold a lot of hope to Kenyans, but eventually leaving buyers under the empty skies.

Tens of millions have gone down the drain with agonising stories of botched dreams reverberating across the ridges that should if everything had gone to plan, be now housing investors in prime homes.

The company’s directors are unfazed by the wrath of investors whose money’s value is yet to be realised, claiming that the Covid-19 pandemic has slowed down the pace of delivery.

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They claim that some of those questioning the firm are yet to complete payments for their houses.

But many of the home buyers have receipts that prove they have completed their payments, yet have no houses to show for it.

In an interview with a local television station, one of the directors said the agreements signed did not have a timeline for when construction of the houses would be completed.

However, documents show that some of the houses had a completion date of December 2017. When Home & Away visited one of the firm’s estates in Witeithie, Kiambu County, we found houses half complete and abandoned.

Home buyers said little work had been undertaken by the developer for more than a year.

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When contacted, the director declined to respond to the numerous accusations leveled against him by the investors, telling Home & Away that he would address all the issues during a press briefing that he would hold at his convenience.

“I am not commenting on that now. You will have to wait until when I hold a press briefing to respond,” he said on phone. The press briefing is yet to materialise.

Institution of Surveyors of Kenya (ISK) President Abraham Samoei says the government should set up a regulatory framework for developers and impose penalties for default on their obligations.

But what remains imperative is for potential investors to be more vigilant when seeking to invest in off-plan, otherwise such investments will be a swansong for many Kenyans.

Real estate experts have shared warning signs of a possible con game, and here are some indicators of an off-plan investment plan going south:

1. An uncertified developer, or professionals working for one

Directors of real estate firms should be qualified and registered with professional bodies.

They should be registered members of the Institution of Surveyors of Kenya, or the Real Estate and Valuers’ chapters, says George King’oriah, a lecturer at University of Nairobi’s School of Built Environment.

Investors should be keen to check if the developers are qualified before committing.

“If the directors are registered members of a professional body, then the investors, if swindled, can seek redress from such a body,” says Prof Kingo’oriah.

“Such professionals will also be keen to guard their reputation and will avoid engagement in fraudulent schemes to maintain future clientele.”

King’oriah, a former secretary of ISK’s Valuers’ Chapter, says he has not encountered registered professionals standing in court to answer to charges of swindling clients.

2. Poor track record

Some real estate companies still operate in spite of having never delivered quality, or anything at all, in the past. They defraud people and then come back anew, promising utopia and conning others along the way.

King’oriah insists that one of the biggest mistakes that investors make is falling too hard for lucrative ventures without doing due diligence.

“If the company lacks consistency, then it is a warning sign. Every investor has a duty to follow up on where they are putting their money,” he says.

“There is every chance that fraudsters have always thrived in fraud and have a string of projects that went down the drain.”

Other developers are only inexperienced, very new in the market and thus are unable to understand the business they are venturing into and the rigours before delivery. Thus, they promise unrealistic projects and fail to deliver.

A background check should help understand what one is getting into.

“New companies are usually very risky,” says Samoei.

Edwin Dande, chief executive of Cytonn Investments says investors should also know who the directors of the company are, how they have delivered in previous projects if they have any, to gauge their workmanship, delivery to promise, timelines and proof that they are actually developers.

“This will prevent one from investing with a briefcase company run by fraudsters,” he says.

3. Unreasonably low prices of property

“If a developer offers a house at a price that is very low by market standards and not achievable under normal circumstances, then one should be cautious and evaluate them fully as it is probably a scam to lure unsuspecting buyers desperate to acquire a home,” says Dande.

Even when the deal gets too good, unfortunately, few investors think twice.

The trick most fraudsters thrive on is giving the best rates in the market and seem like the cheapest option. 

4. A contract that barely protects the investors

Samoei says investors should check if the contracts that they have signed protect them and, in case of mishaps, how the developer will react to protect their interests.

If a project is delayed, for example, does the contract provide for recouping of the monies invested?

A contract that does not address the concerns of the investor is a warning sign.

5. How the developer reacts to queries

As the progress of the developments occur, it is imperative for the investors to study how investors respond to their complaints and issues. 

“An investor that keeps on shifting goalposts cannot be trusted to deliver,” says Samoei.

Additionally, the investor should make sure to be active in pursuit of what is rightfully theirs.

“The buyer should visit the site to know if it is an actual site that exists. This should be done prior to any investment and throughout the development period to ensure the development is running smoothly,” says Dande.

The buyer should be up to date with the progress of the development so that if any issues arise, they can follow up with the developer or consider exit options before it is too late.

“Also, always insist to be shown copies of the title as proof that the developer is the owner of the land and it is not a scam,” says Dande.

“The investor should get a copy of the approved plans and confirm from the respective county government on the validity of approval, and carry out a search independently or through a professional.”

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