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August 21, 2018

Plenty of land in Kenya but property ridiculously expensive: Three ways out

A block of apartments in Mariakani Estate in South B, Nairobi, as pictured on February 5, 2018. /JOSEPH NDUNDA
A block of apartments in Mariakani Estate in South B, Nairobi, as pictured on February 5, 2018. /JOSEPH NDUNDA

Why are property prices so ludicrously high even with an abundance of land and building materials?

Are realty owners trying to rip Kenyans off or are there good reasons why property is not affordable, reasons other than a burgeoning population which translates into high demand?

Firstly, I blame the glibness of media personalities. Real estate is hyped especially through radio advertisements by personalities that make for easy sales.

A common message is that 'If you didn’t buy yesterday, buy today or brace yourself for what is to come', perpetuating the notion that prime plots could soon be a thing of the past.

The promise that developers will be willing to buy land at much higher prices when the Standard Gauge Railway is completed or when the government embarks on infrastructure and urban development is also an appetising one.

The value of this land is purely pegged on its proximity to upcoming centres of economic activity.

Secondly, I lay the blame squarely on our colonial and post colonial masters.

Post colonial allocation of land left most of the population with little or no land and the fact that generations have chosen to speculatively ‘land bank’ and hoard viable urban land has only served to rally property prices.

The non-entrepreneurial culture among the populace has left land and housing as the main lines of investments for the common and the ‘uncommon’ folk.

But the belief that real estate tramples all other forms of investments among the growing middle class is untrue and misplaced: Silicon Valley ventures have proven this a falsehood.

As long as this present mindset prevails and young minds veer off investing in business ventures or any productive value­-adding engagements, land prices will continue to go up.

Wages have not kept pace with the general rate of inflation, and burgeoning property prices have moved at an even faster pace.

The unbridgeable gap between falling wages and prices is further made worse by the fact that, first ­time and low ­paid purchasers are competing against buy-­to-­let landlords with deep pockets and fat bank accounts.

That said, land can be scarce for the simple reason that 'they don’t make it any more' and if there is anything I remember from my economics classes, scarcity fuels demand so prices soar when demand outstrips supply.

Real estate prices have risen considerably in the past few years so most workers have been priced out of houses or land.

If we use past trends to envisage the future drift, I see no sign of a halt. This is depressing but I also learned that demand can’t always outrun supply, especially not with a finite resource like land.

The fact is that unprecedented rices in prices always halt when demand plunges.

But demand will not fall, you say. Well maybe not in your lifetime or mine.

The world population currently stands at 7.1 billion and will peak to 9.5 billion by 2050. What this means is that overall demand for outstretched resources like land and other limited resources will grow by say 35 per cent, that is if we assume population growth will wholly translate to demand.

We will see further population rises in developing countries plagued by increasing birth rates but developed countries are all at or near replacement levels.

This means that in developing countries, property prices will remain up in main towns that offer better economic and social opportunities.

Related: Less than 2% of land in Kenya issued to women despite legal gains

Also read: No husband, no home: Kenyan women face eviction when marriage ends

What is the solution to this problem you ask?


Homes and land cost an awful lot in many places in Britain, a situation prevalent all over the world, so prospective home owners are finding it overwhelmingly impossible to be participants in this competitive real estate market.

House prices in Britain, according to an article printed in The Guardian, average Sh44 million. In an effort to provide panacea to the developing housing crisis, former UK Labour leader Ed Miliband proposed that all developers be forced to cease land banking and hoarding in major cities and their outskirts.

A ‘use it or lose it’ policy for all land idle, while divisive and polarising, will discourage land hoarders and therefore work to improve supply. That is if you consider supply as the willingness and not the availability and or the abundance.

I am not advocating for the repossession of private land but a policy to discourage excessive holding for speculative reasons should be in place. I see no reason why this should not work in Kenya.


The existing land rates framework is largely pegged on land sizes and loosely on land value.

The associated taxes are therefore unbelievably low as valuation of land is rarely done by the involved authorities.

This framework should be revised with more punitive taxes to end our obsession with property speculation.

Further, revised taxes on gross gains made from property speculation can serve to bridge the widening national budget deficit.

Read: So much land, yet so many people hungry

Also see: Women’s land rights ignored, survey shows


Agglomeration (the act or process of collecting in a mass; a heaping together) is primarily tied to growing social and economic opportunities.

The population's appetite for properties close to the cities is therefore as a result of the need to be close to places of work.

In this age of telecommunication, the need for employees to be physically present at the work place should be minimal, especially if companies could adopt a tele-working or work-from-home model.

Such arrangements would, to a great extent, reduce the penchant to live next to cities and consequently the demand for property.

Read: Penthouse sales boom among Kenya's super rich amid urban poverty, traffic jams

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