Feature: Kenya's rural towns becoming new frontier for real estate developers

2017-07-07 11:00:45 GMT2017-07-07 19:00:45(Beijing Time) Xinhua English

By Bedah Mengo and Wang Xiaopeng

NAIROBI, July 7 (Xinhua) -- On one side of the rural town namedMajengo in Vihiga, Western Kenya, stands a two-story building thatis nearing completion. Few metres away from the house is anotherthree-story one, which is hosting several small businesses,including mobile money agency shops.

Away from the two commercial buildings, several others,including residential ones, stand in the small trading center, asign of real estate boom that is happening in many rural townsacross the East African nation.

Buildings are sprouting up in the once sleepy towns as demandfor houses and business premises rises, with the centers seeminglychoking with real estate development.

The rural towns have become the new frontier for real estatedevelopers seeking to invest away from the capital Nairobi, wheremany high-rise buildings are under construction and house priceshave risen sharply over the past few years.

In addition to increased demand for houses and businesspremises, rising rent due to fast economic growth is luringinvestors to the trading centers in towns.

Other factors attracting real estate developers include improvedinfrastructure with nearly all trading centers across the countryhaving their roads upgraded and getting electricity supply.

"I was born in this town and have lived here ever since but Ihad never seen so much construction as it is happening now. Newbuildings are coming up nearly every month changing this small townrapidly," said Benson Chavune, a resident of Majengo.

Chavune, who runs a meat shop at the center noted that the ownerof the building hosting his shop has given them notice tovacate.

"He sold the property and the new owner wants to demolish theseshops so that he can build a three storey modern one," he said,noting the era of cheaper business premises that go for about 50dollars a month is slowly fading in the town.

Monthly rent in the town, as many others across the country, hasbeen on the rise with a single-room shop going for up to 150 U.S.dollars, from nearly half the amount some two years ago.

On the other hand, residential houses are going for between 120dollars and 150 dollars for a two-bedroom house per month with aone-bedroom house being rented out for 100 dollars.

Initially, most of the houses being built in rural Kenya forrenting were bungalows but recently apartments and maisonettes aretaking the pride of place.

"Developers want to cash in on the real estate boom amiddeclining land sizes whose prices are on the rise, with a quarteracre going for up to about 29,126 dollars. You can not buildbungalows and reap quarter and eighth acres plots. One must utilizethe space above, which is what the developers are doing," saidAntony Kuyo, a real estate consultant with Avent Properties inNairobi.

He noted that just as in Nairobi, apartments are becomingpopular in rural areas because of rising returns, which stood at 12percent in 2016 comprising rent and capital growth as compared toother houses.

As those in urban areas, developers in the rural towns are alsopaying extra attention to quality and presenting buyers with trendyhouses that are luring more people.

But it is not only small business premises and residential areasbeing constructed, property developers have detected the potentialof rural areas, with some going for huge real estate projectssimilar to those in Nairobi.

One such a project is in Butere, Kakamega County in westernKenya, where a developer is putting up a 2 billion dollar city.

The city contains a shopping complex with 1,500 rooms, a 36-holegolf resort and a residential area with 4,800 houses.

"We will also have a mall that will have a supermarket, severalshops and a medical complex that will host dozens of healthcareexperts," said Julius Mwale, the U.S. based investor, adding thatonce completed, the development will be a first in the region andin rural Kenya.

According to Cytonn, a Nairobi-based investment firm, realestate sector across Kenya continues to grow across the countrysupported by high annual returns that stands at above 20 percent,high demographic, rapid urbanization at 4.3 percent annually, anexpanding middle-class and improved infrastructure. Enditem

| PRINT | RSS