Land prices in Kiambu fall following stringent county policies

A section of the Flame Tree Estate situated in Thika Makongeni area along the Garissa Highway.

Following a June 2017 plan by the Land, Housing and Physical Planning Department in Kiambu County to regulate land use in order to boost food security, land prices in the county have fallen marginally.

In the plan, the county plans to partner with international agencies to prepare a new spatial plan for the region, a policy shift that has caused ripples in the sector with land prices falling.

With real estate development offering more premiums within a relatively short period of time than farming, it remains to be seen how the county will implement the radical policy shift. Land for real estate commands a significantly higher price than land meant for agricultural use. Therefore, policies that prevent the change in land use from agriculture to real estate adversely affect land prices because land for real estate commands a significantly higher price than land meant for agricultural use.

According to the Land Price Index by Hass Consult for the third quarter ending September, the proposed policies saw land prices drop as investors await clarity from the county regarding the expected policy shift.  

Of the seven Kiambu county satellite towns, Limuru recorded the highest land price drop of 5.7% to Sh19.5 million per acre compared to last quarter.

Juja prices dropped 5% to Sh10.9 million while Ruiru dropped 3.5% to Sh22.5 million. Kiambu Town price per acre dropped 1.8% to Sh42.6 million, Tigoni 1.7% to Sh20.8 million and Thika had the narrowest drop of 0.6% to Sh18.3 million.

Overall, land prices in Nairobi’s satellite suburbs dropped 1.7% between July and September as investors opted to postpone investment on the back of the prolonged electioneering period. The report shows that overall property prices declined 1.8% while asking rents went down by 0.3% with apartments accounting for the biggest drop.

Investors seem to be holding back on buying land in satellite towns in Kiambu County until they are certain that purchases will not be affected by the proposed policies on land use.

On the contrary, Nairobi’s 18 suburbs recorded a 0.4% increase in asking prices over the quarter.

Kilimani was the best performing area with prices up 2.5% while Lavington witnessed a land price correction of 2.6% over the same period. On an annual basis, Lang’ata was the best performing suburb with an 8.5% increase in the asking price while Ridgeways was on the tail end with a 0.5% drop.

The real estate sector has however been grappling with the outcome of its own success. An oversupply in some segments such as commercial and residential apartments has seen a low uptake of the units thus depressing returns for investors, some of whom have to repay loans owed to financial institutions.

A glance at the almost empty underground parking lots of the glittering offices coming up in Upper Hill and Westlands reveals a sector struggling to convince prospective clients to fill up the buildings, some of which are two thirds empty. 

Kiambu County is home to some of the country’s biggest housing projects including Migaa, Tatu City and Edenville.

Tatu City is expected to house 70,000 people with another 30,000 commuting to the city on a daily basis. The new city is a flagship project under the country’s ambitious economic blueprint Vision 2030 and will sit on 2,400 acres of a former lush coffee plantation.

Migaa, one of the premier real estate developments by Home Afrika lies on what was part of the large Migaa Coffee Estate pioneered way back in 1922 by Ronald Stuart Findlay. Upon independence, the farm has changed hands several times before being purchased by the current developers in 2010.