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Part III [Final Series]: The Future of Land Investment in Kenya

ON THE SPOTLIGHT

Far more often than not, we tend to take things for granted in our day-to-day lives. One of those things that many people take as given is the environment. We pollute and destroy our surroundings while unconsciously assuming that land is in abundant supply. However, as you will soon find out, it is not. They are not making any more of it and this should be the rallying call for everyone to start thinking about how to use the available land productively, for the good of the people and the society at large.

Going by the countless land conflicts that we see around the world and locally here in Kenya as well, many are now beginning to appreciate the value of the land. It isn’t in abundance. Think about places like Kisii, Meru, Vihiga, and the greater Mt. Kenya region where scarcity of land has forced the natives to settle in other areas of the country. This trend will continue to persist as the country’s population continues to grow thus evidently, there´s a need to address land resource management from this point in time onwards.

Population Growth
One of the factors that will impact the future of land investments in Kenya is population growth. According to the National Council for Population and Development (NCPD), a government agency that specializes in policy formulation for sustainable development, Kenya has an inter-censual population growth rate of 2.9%. This is expected to reach 52 million in 2020 and about 65 million by 2030. This steady growth, coupled with improving life expectancy which currently stands at 64.4 for male and 68.9 for females, will create immense pressure on the natural resources available (World Health Organization, 2019). As a result, the price of land is anticipated to continue rising as we move into the future.

New Land Regulations & Laws
Given the increasing population and life expectancy levels, we should anticipate a raft of regulations to come into force as the government moves with speed to ensure prudent use of land resources while maximizing productivity. Already, the government is proposing to tighten the noose on landowners who leave their lands idle, mostly for speculation purposes. Soon enough, owners whose lands are not put into reasonable good use will be surcharged accordingly. If the government has its way and the proposals are implemented, cases of land hoarding and speculation will reduce thereby spurring tangible development.

Infrastructure Development
Meanwhile, as new regulations crop up, infrastructure development will carry on to shape land investment in future as the government tries to open up areas that are closed to ultra-modern civilization. This will particularly be helpful as it will reduce the pressure currently being piled on urban areas like Nairobi and Mombasa that are already fully developed. The infrastructure built will attract investments from various industries thereby creating new sustainable urban centres. Also, it is important to note that currently, there are ongoing private efforts put forth by a few land investment companies who sell serviced plots; land pre-installed with the road, water and power supply. Private-public partnerships will dominate the development of virgin areas as the country’s population continues to grow.

Taxation
Taxes got you feeling blue? Well, you should be ready for more of it going forward as the government pushes to reduce the fiscal deficit by enhancing revenue collection in tow with expanding the tax base. The deficit currently stands at 6.3% of the GDP and the National Treasury is hoping to sustain the reforms to attain the 3% mark by the financial year 2022/23. As expected, the reforms will involve taxation and land investment will be one of those low hanging fruits that the government would be keen to tap into so as to shore up its revenue collection. Already, the government in the budget statement 2019/20, has proposed doubling of the capital gains tax to 12.5%. This will see those selling property like land pay 12.5% of the net gain resulting from such transfers. Indeed, more taxes in different shapes and shades will be introduced in future to fund infrastructure development among other critical areas of the economy.

Self-Contained Estate Development
The demands of a fast-paced lifestyle in Kenya, most notable in Nairobi city has led to the development of ´self-contained estates where one can work, live and enjoy leisure activities without leaving the estate. Popularly referred to as mixed-use developments (MUD) in common parlance, the concept is quickly catching up and to this date, we can see several ´mini-cities´ coming up across the nation´s capital. Most notable ones currently include Tatu City, New Town, and Northern Lights.

However, at Sultan Palace Beach Retreat, we decided to go for a different version of self-contained estate development where we did a mini holiday city. We put up an exciting self-contained holiday resort where you can enjoy an unlimited holiday without leaving the retreat’s confines since all the amenities and facilities have been incorporated. The project features beachfront holiday homes, a waterpark, and swimming pool, a residents club that will host a cocktail bar, a beach bar, a gourmet restaurant, an elegant cafe / brasserie as well as gyms, games rooms and large residents lounge. A five-star hotel will be built later in phase two of the project making it one of the most prestigious addresses offering the best in hospitality, entertainment, fine dining in one destination.

Without a doubt, the establishment of self-sustaining communities regardless of the intended use will continue to hold going forward. This will ultimately maximize land productivity as magnificent mini-cities are built on relatively small pieces of land than a typical city would occupy. As such those looking to make a fortune in real estate investment should now begin to focus on buying land to develop ´mini-cities´ so as optimize land use as well as meet the rising desire for work-life balance.

Evidently as explained above, the future of land investment in Kenya certainly holds great promise for discerning investors. However, only those who are creative enough will be able to reap the maximum benefits that still lie untapped especially in various emerging urban nodes. Consequently, investors interested in making a fortune will be required to constantly lookout for opportunities and add real differential value in their project offerings.

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Did you enjoy this article? Well this, unfortunately, would be our last piece on land investment series, at least for this year. While it was originally planned to run in six parts, an editorial decision was reached to cap it to a three-part series. However, make a point to subscribe to our newsletter as we explore different subjects that are of value to you. Feel free to email us on ideas that you would like us to write about.

AUTHOR´S NOTE:

The views expressed here are of the author and does not necessarily represent position of Sultan Palace Development Ltd and as such does not warranty any particulars. Click here to read our Terms & Conditions.