Business of Real Estate

For a majority of people real estate is owning a place to live in, a home.

However for the few ( excluding me) this is a business just like any other. They buy plots hold and sell once value go up. In Nairobi the price of plots is always on an upward trend. At the moment a 1/8 plot in Kasarani is going for 5m shillings; this is all thanks to Thika Road. Rent in such an area ranges from 10k - 20k depending on number of bedrooms and the finishing quality of the flats.

The agency business is on the up but household insurances look vague at the best. I have seen a cover for 11k and i dont know if this is for contents only or for brick and mortar? I mean if the bulglars come and still all my Mutumba, do I stand to get the same amount as those with flat screen tv, fridges etc......? Am sure the ambiguity of it is for the insurers benefit.

I have seen a 1/4 acre plot with 20 units - i.e. 15k *20 = 300,000 a month, even after payng the mortgage this is still a decent return.

The other common business with real estate is thebuilders. I once saw a empty plot being rented out to those adjacent to him/her when building. This is all because of the culture of building a 100% of the plot. The guy builds the entire plot and there is thus no place to park vehicles by the tennants. The road sides are still spacious but if the trend of buying cars continues in Kenya as it is then this will eventually create a problem as all the flat tennants will not have a space to park their car - point to consider when building.

The middle class is on the up and to be able to move with the middleclass, the real estate owners need to bear the future in mind. Providing a designated parking space will up the rents in the future. Ignoring this at this moment might not have an effect but it sure will affect how much you can charge per flat if you dont have the parking space available. It also begs the question where are the city planners in all this?

With Plots going for 0.5m in Nyahururu and 0.6m in Nakuru (Kenyas first growing town), then you dont need to start of in Nairobi. The rents are pretty decent in these locations as well. For a similar house in Nairobi in Kasarani that goes for 15k you can fetch 8k and 12k in Nyahururu and Nakuru.