New real estate ventures are reinventing Athi River Town

Had you bought a house in Athi River three years ago, the cost would have been about Sh3.9 million. Now, it will cost you a staggering Sh18.4 million.The latter is the current cost for a four-bedroom bungalow sitting on a quarter-acre piece of land. It’s a depiction of how things have changed for the town that is in Machakos County.If the bungalow does not suit your taste, then you can opt for the super bungalow, which will set you back Sh22.6 million. Not long ago, Athi River was just but a rocky plain thatched with shrubs and thorny acacia trees. Occasionally, one would spot a zebra or two grazing.

In the vicinity of the industrial town were towering cement and steel factories. And a few years ago, all that dotted the area were rental houses that housed the factory employees.But this is no longer the case. Today, well-planned estates dot the landscape and smooth tarmac roads have replaced the potholed roads of yore.While Bamburi cement, Devki Steels and Simba cement had become synonymous with Athi River, South Park, Everest and the Green Park estates are the names that will soon be on everyone’s lips.Today’s Athi River boasts plush gated communities and eye-catching sceneries. For instance, on a 167-acre piece of land sits the Green Park estate.

The estate is surrounded by manicured lawns and neatly trimmed hedges.On one side of the estate, a river, Mto wa mawe gurgles as it meanders through the rocks. On the other side, the majestic Lukenya Hills lean forward to give the residents a morning and good night kiss.“Beautiful scenery don’t you think? This right here is a lifestyle,” says Ms Angelica Wambui, marketing manager at Superior Homes Kenya, the company that is developing the 700 units’ estate.

According to Ms Wambui, in order to maintain the status of the estate and ensure that maintenance is top notch, residents must sign a deed of covenant, in which they agree to comply with the rules and set standards of living.“You see, lack of control has made some of the once considered posh estates lose their value. We do not want that to happen here, therefore, every buyer has to abide by our standards,” she says.

But one question begs, why build a gated community in stony Athi, 30 kilometres from Nairobi’s Central Business District (CBD) and sell each unit at Sh35 million?Well, according to Ian Henderson, the proprietor of the project, he wanted to establish something that would not be “choked by the development of shanty towns, as is the case with many gated estates in other parts of the city.”“I already had a vision of what we could do with the land, it helped that there were plans to construct a road that would pass next to the site, therefore opening up the area,” says Mr Henderson.He adds: “Having fallen in love with the place and the clean uncontaminated fresh air, I would not think of any other place.”Mr Henderson argues that the steep rises in prices of houses is driven by demand and the fact that Machakos, in particular is among the fast developing towns in the country.


“There are so many upcoming developments that are affecting this county, such as the standard gauge railway and Konza city. With this comes competition from developers who are rushing to tap into the once rural areas.”Such competition, and escalating dollar rates, Mr Henderson says, have a role in the surge of property prices.These factors have pushed up cost of construction materials which lamenting developers say they have to pass down to the buyers.The growth of towns such as Athi River, Mlolongo and Syokimau whose future was once bleak has been attributed to many factors. As developers build in this new places, prices also go up.

According to Catherine Kariuki, a real estate lecturer at the University of Nairobi, a number of factors affect the prices of property. One of them being the topography and proximity of the property to the CBD.“Buyers are looking for place which are close to town where they can commute. At the same time, they want beautiful scenery,” begins Ms Kariuki.But she says that developments, of facilities like institutions and industries coupled with planning regulations in such areas is also contributing to highly priced properties.

“When the government decides to open up places which were ones secluded for industries, the cost of land will definitely escalate and in turn, the property put up will go up. It is the only way to recover the cost of expenditure,” she argues.However, to Reginald Okumu, a property valuer, the price of property is driven by supply and demand principle.“There is a growing demand of buyers who are looking for exclusive places to live in. And there are developers putting up houses exclusively for these buyers,” he says.

This may be the case for one buyer, who two years ago, bought a house for her parents in the ritzy estate at Sh16 million.“My parents wanted a retirement home, away from the hustle and bustle of the city. We settled for Green Park since it had what we wanted,” she states.

Those buying into the gated communities, Mr Okumu says, are looking for a lifestyle and when one is in search of it, they do not mind what they pay.He explains that although Machakos may be seen as a not-so-ripe area in real estate, it is slowly developing to become its own market. And this is what is steering the costs.“The type of units being put up in this county are unique and stylish. Developers are now targeting the upper middle class and at the same time the high class buyers, who take note of details like security and cleanliness of the area.”

While justifying the high prices of the green estate, which Mr Henderson says is “affordable” and “matches the quality we offer”, he argues that key among the drivers of prices of the houses has been the cost of land which have significantly gone up.But Ms Kariuki points out some key aspects that drive the prices upwards. She starts by stating that perception that “we” are a low middle income country has greatly tilted prices.“There is perception that people now have a lot of money, after all, wages were increased,” she states.

She goes on to say that cost of transfer of property which is usually factored in the price of the house is one that buyers no longer take a keen interest in.“Many times, this cost is usually not obvious just like that of taxes charged on construction materials. A buyer will simply be given the tabulated cost.”


In this year’s first quarter report, Hass Consult, a real estate research company, indicated that although the rate of rising property price was slowing down, semi-detached  houses, such as maisonettes continued at the same pace of price rises to record an increase of 2.3 per cent.“Semi-detached houses and apartments are now generating substantial returns on investment, with rental yields above seven per cent, and total returns including price gains, running at 18 per cent for semi-detached houses in the year to end-March,” reads the Hass Property index quarter one report.

To Ms Kariuki, reintroduction of the capital gains tax has left developers thinking of ways to recover their costs.“There has been an increase across the board. Developers are obviously cushioning themselves from this tax.”A recently published data by the Central Bank of Kenya (CBK) indicates that the average size of mortgages have increased to Sh7.5 million.According to CBK, banks blamed high cost of properties, high interest rates, and high cost of incidental costs as the major impediments to the growth of their mortgage portfolios.

Finally, she notes that an influx of diaspora population which is heavily investing into the real estate industry is also driving prices up.“This population mainly relies on the dollar rate. They get interest rates based on the performance of the dollar. This is a group which would rather have their homes empty as they wait for the prices to shoot up.”Mr Henderson states that the houses are worth every penny.“Every business has its uniqueness. Green Park concept is different from what other competitors are doing. We give you a house based on your financial status,” he says.Like Green Park estate, prices in other gated communities have also shot off the roof. A villa, which is selling Sh34.99 million in Green park estate will cost you Sh21 million in Bahati ridge.In Bahati Ridge, a four bedroom town house that was selling at between Sh10.5 million and Sh11.5 million three years ago is now going for Sh13 million, while a bungalow will set you back Sh25 million.

– This article was published by Daily Nation  on 18/06/2015.

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