In several African communities, wealth was measured in terms of how many wives, children, land and cows one had. Girls were not left out either- they were sources of wealth in terms of dowry. Today things have changed. People are no longer talking in terms of cows, and daughters but real estates and equities. Even those who own land and cattle are now venturing into real estate and equities.

With over five acres of land lying idle for the last fifteen years, Musimbi John, a retired teacher regrets for not utilizing this land that lies on the outskirts of Nairobi. “Had I known there would be demand for real estates one day, I would have ventured into this,” says Musimbi who bought this land from his savings in a teacher’s SACCO.

Currently, Kenya is facing a major house shortage. It is estimated that the country’s annual urban demand is at 150,000 units that cannot be met by the supply averaging only 30,000. While meeting a delegation of Japanese investors who were in Kenya to explore the housing sector, the Kenyan Assistant Finance Minister, Betty Tett said that the government was coming up with a tax plan for materials intended for low cost houses, with the aim of exempting individuals from paying VAT.

Many Kenyans shy away from investing in real estates. They argue that it is expensive and takes long to realize profits. However, for a serious investor, patience pays. If one took up to 90 percent mortgage, and repays it in less than twenty years, the benefits will come in handy. This is possible as mortgage finance institutions such as Housing Finance are coming up with new products for those who want to save for homes. The financial institution recently announced 1^st Hop Savings, a product designed for Kenyans who desire to save for a home. This product is meant for any investor, above 18 years, who can save upto Ksh. 4,000 per month for 20 years to qualify for a morgage.

How can one invest in real estates?

Ensure you own property at a place that is prime. In Nairobi, one may choose to own property in the middle class estates that have shown tremendous increase in property value. A 3 bedroomed house in middle class estates like Lang’ata, South B and C,  and Nairobi West was going at Ksh. 250,000 in the 1980s. It shot up to Ksh. 2 million in the 90’s. Today, the same house is trading for between Ksh. 3.5 to 4 million or more in the open market. Despite the cost, the demand for these houses is high. According to David Irimu, Director Metrocosmo, “the demand for houses in the middle class estates is so high. If a house is vacant today, it will be gone in less than a day. Houses are difficult to find. They are selling like hot cakes.”

Another option would be having an assortment of real states in high, medium and low class estates. This will help as one shall distribute his resource and thus complement each other in cases where the value may go up in one, stagnate or reduce in the other.

People who own real estates and feel the value has been stagnant can increase the value to what already exists by  introducing a new aspect such as putting up a car park or servant’s quarter. Incase of commercial property, one could split up a huge space that was worth Ksh.50,000 but had no tenant into four rooms worth Ksh.18,000. This will attract new clientele who will be willing to pay some extra coins for added value.

Lastly, one has to ensure that the right property is put up at the right place. You may put up residential houses in an area that is suitable for offices forcing you to restructure the entire property to suit your clientele. It is thus advisable that one conducts a market survey and consults where necessary, to make a wise decision.

The Risks

Just like any other investment, there are risks in real estates. It is important that one plans well, so that on taking a mortgage, one pays it in time to avoid losing your investment.

It is always advisable to insure your investment as you may incur huge losses in the event of fire or any other disaster. If the property is insured, you are assured of compensation incase of damages. This may look an added expense but it is not until one has been compensated  for damages that have occurred that he realizes the importance of insurance firms.