INVESTING IN REAL ESTATE.

INVESTING IN REAL ESTATE.
Real Estate is one of the best ways to invest your hard-earned funds since land is a limited resource and as long as the world’s population keeps rising, land will continue to appreciate in value.

A few years ago[2003-2005] an acre of land in Karen was sellng at KES 3.5 million. Currently [2010] the same land goes goes for KES 18 to 20 million.
An acre in Runda was selling at KES 4.5 Million in 2003. Currently the same acre now sells at around KES 20 million.

Real Estate investment is also flexible in that it accomodates every size of budget.
The ammount of money that you can raise will play a big role in determining the scope of investment.
You can start on a very small scale and continue up the ladder.
For small scale investors, ideas such as buying a small piece of land far away from the main city and holding it for a while which can be anything from several months to a few years can assist in this.

PROFIT THROUGH SPECULATION

One of the quickest ways to gain profit in Real Estate is through speculation.
Land away from major towns is usually lower priced. For example, Land in areas such as Kamulu, Nakuru outskirts , Lamu can cost at approxmately KES 300,000 per acre.
This land will definately cost far much more as time goes by and development catches up.
Once you carry out intensive research on low-value land and get inside information on new developments, this is the right time to buy whle the price is still low.

For example, there are future plans to develop Lamu as a port. Peolple who buy now while the land value is low will reap great benefits yearsa later.
There are also plans to develop the commuter train between Athi River and Nairobi. This will also lead to a high increase in land price in the surrounding areas such as Kitengela once the project is complete.
The by-pass along Ruai ,Juja and Ruiru will also lead to an increase in the current land prices there.
Within Nairobi CBD, Muthurwa area will develop greatly once the South East Commercial Park is fully developed.
Along Mombasa road, plans are underway to develop the ICT city at Malili ranch.
All these create great opportunities for buying and later on offloading to the market once the developments are complete.

PROFIT THROUGH SCHEME DEVELOPING

Another method of making profit in Real Estate development is in buying a piece of Land , subdividing it into smaller plots then developing infrastructure such as electricity, roads and water.
Once infrastructure is developed, the plots are then offloaded into the market at a profit.
Areas such as Syokimau, Kiambu, Ongata Rongai are ripe for this kind of developing.
Areas such as Kahawa Sukari were developed through this kind of Method. Development control is then enforced through setting up of a community company to approve new developments to a specifi standard .This prevents shoddy buildings that reduce the land vsalue from being developed.

PROFIT THROUGH CONSTRUCTION.

In areas where large peces of land are not available such as South C, Langata, South East Commercial park[Muthurwa], Westlands e.tc, a good way of making profit is through construction of buildings. Since land is not available abundantly laterally, the buildings are stacked high onto each other for several storeys as can be approved by the Local Authority.
Use of creative architectural designs will assist in unlocking the full value of the investment through designs that fully and optimumly utilise the land and are also attractive to potential buyers hence creating competition.
The buildings are either sold as individual units or rented out.

CONCLUSION

Its common knowledge that the three rules to fruitful investment in real estate are
1.Location
2.Location
3.Location
You therefore need to put alot of resources in finding the best location that has a value that has not been fully tapped.
The inside knowledge that in future there are plans to develop infrastructure such as a by pass, university, hosital, city extenson e.t.c become very critical in determining your investment.
For example,the early white settlers had prior knowledge that the Imperial British East Africa company will make Nairobi the captal city and zone areas such as Hurlingham and Westlands as high class commercial centres.By then an acre of land there was very low. Currently, many years later, an acre of land in Westlands can retail at KES 180 million so the initial investors who took the gamble are laughing all the way to the bank.
Its your time now to also get down to seek such lands. Good luck.

Frank Gichuhi

www.a4architect.com

Francis Gichuhi (692 Posts)

Architect Francis Gichuhi . B.Arch. University of Nairobi. Registered Architect, Kenya. Member, Architectural Association of Kenya. Contacts. email info@a4architect.com. Telephone +254721410684


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  1 comment for “INVESTING IN REAL ESTATE.

  1. Timothy
    May 17, 2011 at 3:27 pm

    Thank you for advice. Am in real estate.

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