Real Estate,Land Speculation and the Folly of Wealth Creation in Kenya.

Fellow Villagers,

This asinine and talismanic obsession with buying land at made up prices is something that I have a very hard time wrapping my head around as a Kenyan. How did it come to be that we were conditioned to fantasize about owning parcels of earth especially when land is no longer a factor of production in this age of science? What curse is this that every Kenyan has of wanting to buy land and putting up monolithic structures yet it is the most illiquid and biggest wealth trap especially now when liquidity is the weapon to beating your way around any new emerging market?

Case in point,the Muguku family. One of the most prolific moneyed family of our era made a massive blunder by pulling together an odd 3 billion and some change to put up Waterfront Mall in Karen and now are asking for 20 billion to dispose of this money pit! A whooping $200 million USD for a mall that does not produce any capital goods!Is this why as a continent we contribute zero to the global economy because we refuse to understand economics?

If you are under the age of 30,let us not repeat the mistakes of our forefathers and perpetuate this fanatical and flawed way of thinking.Don’t ever buy land, instead get yourself good reliable internet,a desktop computer and read everything and anything you come across until your eyes are at the verge of falling out of their sockets. Make a product,create value and you will unlock wealth like none before has seen. Don’t follow the path well trodden, always look for the secrets yet to be known by all.[ATTACH=full]361331[/ATTACH][ATTACH=full]361332[/ATTACH][ATTACH=full]361333[/ATTACH]

Wewe endelea kuinvest in your alternatives and let’s see if they will be existing when you reach my current age.

Land is the only meaningful and lasting investment in this country

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That entire project is worth $30M tops if they are lucky.

$200M is a pipe dream.

Why would they want to offload such a property in such a cold market??

As usual, here comes you, and your flawed thinking

How much is the land? 50.6 acres in Karen? Over 3 billion KES

You fool

1/2 an acre is about 25M in that area. You are a smart man. Do the math.

The price is reasonable…

Spot on! Mimi when i bought my first car before buying those meaningless 1/8 plots that people think are the keyholders of wealth karibu my parents wanimalize. In this country, people are so risk-averse that they better sink 10M buying a useless 0.5acre in Thika that they will never recoup than use 10% of that dough to launch an ecommerce website, venture into dropshipping, try trading cryptocurrencies etc. Gone are the days when OWNING land used to be factor of production, especially considering that you can now lease even 50 acres and do whatever you want to do, harvest the produce and pack up after your lease period is over. Nowadays even buying a house is just plain stupid when you can rent the same for cheaper than the projected ROI. In the house i live i calculated that it will take the owner over 30 years of me living there for him to recoup his initial investment. The man is 55, he will probably be long dead before then and leave this kids squabbling over it.

Young people especially sisi below 30 should endeavor to do better than this. And with the rise of AirBnBs and the cheap motels hata hakuna haja ya those retirement/holiday homes that folks use to set up ocha or at the coast that they use once a year. The world is changing…FAST!

DNA confirmed. Niaje @Mimi Huwa Namwaga Ndanii … changing your handle wont make a difference. You have made valid points though and I agree with your observations.

You are very wrong man. Land might be a relatively secure investment vehicle but it is not without its own unique risks. Wangapi wamebomelewa manyumba hii Nairobi?

Land/houses is just a psychological trinket that you buy after you have actualized your dream of having a consistent passive capital flow - just like a luxury car, jewelry or an expensive piece of art. Trying to make it a source of passive income utaumia sana.

I am not surprised. At least you are consistent.

price may be reasonable from the sellers POV but from a purely investor’s standpoint thats flushing mulla down the toilet. You will never recoup 20billion from such a nonsensical structure even in 20 million years. And BTW who still goes to the mall for fun or shopping? We are no longer in 2010. Siku izi kuna akina glovo, uber eats, jumia fashion etc. You can now order your PS5, KFC streetwise or nextgen TV without ever leaving your home, you don’t need the mall!. Corona is not even helping things!

The best thing those malls are for is taking pikchas for the gram once every three months or something.

We can learn alot from Indians. Mhindi hununua shamba only if he intends to use it immediately. He understands time value of money and you will never find him with idle pieces of land. Akinunua prime plot anajenga flat/block. Akinunua non-prime plot anajenga warehouse, factory, etc. Akinunua shamba anaweka greenhouses. Hutawahi pata mhindi na an idle piece of land for years. He buys only what he needs for use. Mkinunua plots nunueni with an immediate use for them muache kulalisha pesa. Huwa nahurumia watu sana nikiwauzia plots halafu zinabaki dormant for years badala wazitumie.

Most of the time they approach it from that standpoint because they know huku sio kwao, even if they are citizens. But then again, hii dunia haina mwenyewe. Let’s live here and now.

True. However, it has worked to their advantage. They are cash-rich and snap up business opportunities before a bonobo can access loans and use the idle land as collateral.

Plots can also be a store of value, just the same way you would put your money in an account which earns you interest.

Yeah, try selling it ndo utajua sio store of value. Good luck with brokers like @Azor Ahai and time-wasting buyers. Nowadays ata banks wanakataaa to use plots as collateral for loans, and if they do so they will only give you a 25% of the estimated value. Plots are the worst store of value, ata heri ununue toyota premios IMO. Atleast hizo wakenya watakazana kuzichukua at reasonable prices.

Past performance does not guarantee future performance. You better recognize.

The population is not growing as fast as it did in the past. You will need a lot more work and data to identify where population will move to because the growth rate is reducing. Enzi za kununua plot in the middle of nowhere and sitting on your hands iliisha kitambo.

You have a point.

The blindside to this kind of reasoning: you are assuming a constant and sustained trajectory of the current economic model.

You think people will always be relying on banking, that fiat money will last for much longer, people buying food from the supermarket, infinite growth of info-tech, etc?

That model could collapse. In fact, it will likely collapse. Then, big land owning corporations who use the land to produce food will hold the masses hostage. Those who have some place to call home where they can produce some food will have some reprieve.

The value of land will only become apparent then.

I agree with you both, but things will change. Infact right now when prices are low is the best time to buy the prime ones. I’ve seen it all. Over here after the housing crash of 2008 if you told anyone that real estate would make a comeback most people would’ve laughed you out of town. How quickly things change. Right now finding a house has become extremely pricey and difficult. The kenyan economy isn’t doing well so it’s expected that demand for everything would be artificially low.

that will take apocalyptic or near-apocalyptic disasters for that to happen. What are the chances that will happen in your lifetime? Let’s say you are 40 years saa hii… you have give or take 25 or 30 years left in your bid. What are the chances that banking system will collapse completely to the point where u will need to barter produce for produce like we did back in 1500 A.D before 2050? Zero, zilch…nada! Won’t happen! Hoarding tracts of land for that alone is just stupid IMO.