Resort town of Nanyuki in Laikipia county is leading the way in astronomical hikes in prime land prices as strategically located counties post a faster growth in land costs than Nairobi.
Land prices in Nanyuki are said to be increasing at a fast pace with some of them trippling in less than a month, fuelling projections of a bubble in coming years.
The town was founded by British settlers in 1907 and its attractiveness to developers is growing by day due to proximity to fertile agricultural farms, expansive ranches, game parks, wildlife conservancies including mount Kenya and the equator.
The town is serviced with good infrastructure including an airport and is the main airbase for the Kenya Defence Forces.
Lordship Africa, a grade A property developer, has cited a case where quotation for a three-acre parcel of land shot up three-fold in just three weeks, underlining the “crazy” pace at which land prices are skyrocketing.
The land in question was priced at Sh70 million when Lordship first showed interest,but doubled to Sh140 million in the second week and further to Sh200 million by the third week,chairman Jonathan Jackson said.
Nakuru, Eldoret and Naivasha are other towns that are experiencing surges in land prices, largely due to their centralised location near the country's agricultural productive farms including the food basket regions and wildlife.
A plot in the prime area in Eldoret's central business district whose asking price was between Sh10 million and Sh15 million five years ago has, for example, spiked up 10-fold to sell for about Sh100 million.
In Nakuru, the demand for space is on the rise as its popularity as a retail and hospitality destination continues to rise with supermarkets now in the upwards of 70, while hotels are rapidly springing up.
“The demand for retail space in these towns is being driven by the mass population and farming activities that provide ready resources for expanding companies,” said Nakumatt Holdings' director for strategy and operations Thiagarajan Ramamurthy. “There's also increased spending power.”
The pricing of land in the counties is believed to be purely based on speculations that the value will accelerate at the same rate like that witnessed in Nairobi in the past years.
A plot in the capital city has in the past risen from an average Sh5 million to Sh60 million within five years.
Jackson said most of the land owners and brokers in the counties are using the speculative pricing experienced Nairobi in the past as benchmark for quoting theirs.
“Most of them say 'I have a clue on what price will be in future...if it was at this price in Nairobi three years ago and now it has increased, mine will also increase and I can get a lot more in future',” he said during the two-day East Africa Property Investment Summit in Nairobi last week.
“We are finding a lot of problem because we have land in a very good location but crazy prices. There are cases where some hold onto it for higher price in future. I see the collapse we saw in Eastern Europe 20 years ago happening here. It's not a question of if but when. "
Tanzania is also undergoing a massive growth in land prices in strategic towns away from commercial capital, Dar es Salaam. Mtwara, a port town in the South, has experienced "ridiculous" price escalation in the recent years fuelled by hot offshore cash with an care now going for and much as $250, 000 (Sh23. 25 million), Pangani Heights managing director Heri Bomani said.
It's in Mtwara that billionaire businessman, Nigerian Aliko Dangote is building a $500 million(Sh46. 5 billion) cement plant and has sought approval for a 75 megawatt coal plant.
"Most of the people have bought land just to speculate," Bomani said. "There is need for a policy to create an enabling environment. " A developer buying land in Tanzania must be incorporated there.
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