As you read this article, you are probably stuck in traffic or driving through those lonely dark alleys taking great care to avoid the bumps. Spending two or more hours on traffic has  become the norm. And sometimes you have to take a motorbike to complete the journey.

Those driving hoot nervously at their gate. You cannot take chances with security in this side of town. Usually, you reach home well past midnight. Hungry and weary, you take a quick bath followed by a cold meal.

The children are already asleep. You never get to see them since you took the leap of faith to own your own house. You leave the house too early and come back quite late. On a lucky day, you drag yourself to bed well past midnight. On some days, night duty calls as you join the village vigilante to keep your hood safe from night prowlers.

That’s life for you in your new hood. The place you call home. Your own house.  Finally.

That’s the new Nairobian. Pushed out of the city by skyrocketing rents and exorbitant house prices. It’s a village life right here in the city. Social amenities such as schools, churches, hospitals, restaurants and shops are far off. You do your shopping for groceries once a month and pray that they stay fresh in the fridge amidst the erratic power supply.


For along time, rents in Kenya had been stable. Come the late nineties and the impact of the lull of various agencies charged with developing new housing units such as the HFCK and National Housing Corporation (NHC) started to bite. The last major housing projects done were Langata, Buruburu and Komarocks. What followed was dramatic mismanagement and theft that sent most of these developers into limbo. Without new public houses being developed, growing city population and the influx of foreigners – refugees owing to turmoil in the neighboring states, Rwanda, Burundi, South Sudan and Somalia, the housing need in the city rose to crisis levels in the 1990s.

Naturally, private profiteers took over. Partially aided by a corrupt City council and weak approvals systems, the city witnessed emergence of estates in no particular order or plan. Ever since, Kenyans have had to contend with comical house designs and buildings collapsing with tragic consequences as anybody and everybody who could acquire a plot within the city built for himself and others. In up market areas, a new discovery, the servant quarter became a well sought after accommodation.


Pressure on rents never ceased even with the coming of the NARC administration and the revival of the development agencies in 2003. It actually got worse. There was renewed investor interest and local hope. It’s during this time that Kenyans were voted the most optimistic people in the world, and the turmoil in the neighboring states persisted.


18house1In light of the improved governance, new developers rushed in to meet the the housing demand. For the first time, apartment living was introduced in the upmarket estates of Westlands, Parklands, Kileleshwa, Kilimani, Valley Arcade and Lavington.

A new crop of buyers too emerged. They were well endowed with cash and could gobble up all the units even before they were built. This same group of moneyed cash buyers would follow the developers to every new project and book them up. It was not uncommon to be told that a new project that had not even started had been all taken up by the very same same buyers. The group consisted of a small clique of local tycoons mostly government bureaucrats with a generous dose of foreigners mostly Somali and Sudan nationals.

While the local tycoons concentrated in buying the new upcoming houses in upmarket estates, the foreigners initially concentrated in the down market taking over EastLeigh, Komarocks, Saika, South C, Nairobi West and downtown Nairobi shops.


As the party of property buying went on, ordinary Kenyans were salivating on the sidelines. Remember as per the 2013 KNBS statistics, less than 70,000 Kenyans earned more than KES 100,000/= and less than 20,000 mortgages had been issued by our banks since independence.

These figures confirm that Kenyans were not party to the real estate craze. However, you cannot salivate forever. Ordinary Kenyans soon found a way to eat the crumbs from the main table. That’s how the idea of palatial homes in the outskirts of the city was mooted.

From the blues, award winning land buying companies sprung up. So as the moneyed built up and took over the city, ordinary folks bought and subdivided plots in the city neighborhood for their new homes.

Suffice to mention that at the same time, there was a massive investment in infrastructure that opened up the city. The bypasses were created. Thika superhighway was up and running. You could live in Thika, Ruiru, Limuru, Kijabe or Katani and still work in the city.


Whereas the real estate developments spawned new opportunities, there was no significant change in real income of Kenyans. The influx of renting foreigners such as the US marines and UN bodies pushed rents in upmarket areas like Runda, Gigiri and Kitisuru to new highs. We saw rents balloon from KES 300,000 to KES 500,000/= in Runda. In other suburbs like Kilimani, Westlands, Kileleshwa and Lavington rents averaged from KES 100,000 to KES 250,000/=

Now, you may ask, how many working Kenyans earn a house allowance of KES 100,000/=?  One may also want to know how many Kenyans can afford a monthly mortgage of KES 223,589/= for that is the monthly mortgage repayment for 25 years on a loan of 18 million at the controlled rate of 14.5 percent. Remember, such an apartment can only fetch KES.120,000/= as rental income.  These figures make no sense. Yet, somehow, buyers continued to flock the developers offices buying both rental and office spaces, and mostly in cash. There was some money streaming from somewhere not supported by government statistics.

It could be good money – from the diaspora or hot money. At the time, piracy was rampant along the Indian Ocean and Drug lords and drug money was ruling our parliament. Corruption was also a top earner during this period. But, who cares? What matters is that developers were selling. They could build and sell. And sell more even before building.

New kids on the Block like Suraya Property Group Limited and Home Afrika Limited, a merry go round burst into the scene.  They too sold all their developments and made money. They went into the Stock Market through a newly created window to raise more funds for developing new units. Their foray at the Stock market was unanimously endorsed. They got more than they asked for. And more buildings came up.


As the number of developers increased, pressure began to mount on Land. They quickly came up with more ingenious ways to acquire more land and build as Land prices also went  over the roof. Joint ventures took over. Those who were heir to large tracts of idle land fell in  luck. Developers were pounding their doors begging for deals. Blind greed took over. Big projects were launched amidst pomp and fanfare. No sooner had the ink dried on the new deals than court cases began to emerge. A battle of the wolves sharing the carcass. One famous case was that of Tatu City amongst the shareholders. Another was that of Suraya and the Gatabakis. A dramatic disagreement that pitted the husband and wife on different sides. The wife got a generous settlement from the courts. These cases could have heralded the meltdown in the real estate sector.


Maybe it was a change in strategy or they smelt the meltdown. First was the bold foray into the East of the City with the 360 apartments and the Great Wall on Mombasa road. It was the first statement in development that recognized the Kenyan middle class. These units were developed with Kenyans in mind not some deep pocketed shadowy figures. The prices ranging from KES 2.8 Million to KES 4 Million was pocket friendly to most Kenyans. Earlier, a similar development was the Nyayo Estate Embakasi, by the NSSF that also targeted the Kenyan middle class.

The first signs that things were getting thick in the upmarket or money was running out from the moneyed few was when Suraya launched the Studio apartment – Bedsitters in Mlolongo selling for 1 Million shillings. At around the same time, the Chinese arrived bringing with them cheaper credit, ingenious cost cutting and deal making skills. They could easily out price our local developers and still make a profit!  All over sudden, buyers had choices both in variety and price. Banks that had fallen over their heads loaning developers started experiencing slowing loan repayments and ultimately defaults.


Those who had moved to their homes in the outskirts started getting weary. Sleeping late and waking up before dawn is not for the faint hearted. Slowly, it gets up to you. You start accepting that the  opportunity cost of staying in the Bundus is not worth it afterall. You have missed many coffee dates and drinks with friends. The insecurity is also getting to you. Your children would go for sleep overs at their friends in the city and refuse to come back. And when they finally go to college, they don’t want to come back to your Bundus. This is Mom and Daddy’s home. Not theirs. The young at heart want to live in the heart of the City where the action is not in some isolated village. You too admit that you have missed your church and friends. You are cute-off from civilisation. You are actually tired of village life in the city. The cost savings was a mirage. You still pay for security, water, sewerage, garbage and the cost and pain of sitting in traffic daily is unbearable. If only you could get an apartment in the city at the same price, you wouldn’t  think again. Hurrrrrrraaaaah.! That’s exactly what has just happened.


Those who went to the Bundus did not spare any expense to build their dream house. They built a Runda Villa in the village only to discover that your house in the village has value in as only you are the one staying there. Try renting it out or selling it. You will meet those buyers who want the plot and not the house and those who want the house and not the plot. Needless to say, your target market are those being pushed out of the city in search of cheaper living options. You don’t expect them to have much cash, do you? So, forget about those millions that you have been brandishing in drinking joints as the value of your house. It’s worth absurdly much much less!

Moreover, the rental demand is at it’s Lowest. Only owners can take that pain and discomfort in the guise of not paying rent. You actually become a prisoner in your own home. You must live there at all costs or it either stays desolate. Alternatively, rent it out for peanuts or hire some village wag to stay there for you just to keep it in fair shape. Property is location. Stupid.


It may not be there yet buts its coming. This is not a prophecy but pure science. Whenever there is a bubble, a burst is sure to follow. Brace yourself for it. What could hold it longer is the fact that most properties were bought with hot money and not loans. Such buyers can  take the heat longer. Otherwise we could have already witnessed a bloodbath like what happened in Detroit US, where mortgage holders handed their house keys to banks and walked away.

Finally, what would you do if the house you bought five years ago at 18 million is now selling at 8 million and looks much better than yours while your outstanding mortgage is still 17 million?

Evans Majeni is a businessman and a director at Tahidi Homes Limited.



  1. Interesting and precise analysis on the real estate market in Nairobi…many people have been stuck in the unfortunate chain of events while thinking they are helping themselves. So sad given the amount of investment one puts in!Hope Kenyans learn from those who have been already there not to make other mistakes!

  2. If only we looked at property from a living perspective rather than a Commercial venture. The narrative that is “buying a space is for the few but Living in a space is for everyone” makes more than sense.

  3. Tim, From a living perspective, a house is just a consumable like TV sets or seats. As an investment, it must make a return on investment. Our buying prices and rental incomes do not make business sense for now.

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