Some property dealers in Mombasa have taken advantage of insecurity at the Coast and are buying chunks of land anticipating that prices will rise when peace returns.
Insecurity has resulted in slow movement of property and reduced prices, but investors are buying land, according to Vipingo Holiday Homes director Malusha Majani.
An eighth of an acre on Links Road in Nyali, one of the areas where land prices skyrocketed over the past three years, is going for Sh6 million, down from Sh10 million a year ago.
A quarter of an acre at Vipingo that was selling at Sh3.5 million is going for Sh2 million, he said.
“We have reduced the prices of our four-bedroom houses at Vipingo to Sh30 million from the starting price of Sh35 million and are experiencing low inquiries because people are in a state of panic.”
Property deals have gone down by at least 50 per cent compared to last year, according to the businessman.
“But those in the business of land buying and selling are excited. They are aware that people fear taking risk and will shun these areas but they also know the situation will not remain volatile.”
Coast has been hit by violent attacks recently in which nearly 100 people have died. Lamu County was the most affected. Other regions affected are Kilifi and Mombasa.
TIME TO BUY
According to Mr Majani, although attacks in Kilifi have dampened hopes of investors who were banking on the tarmacking of Mavueni-Kaloleni road, land buyers are enjoying prices which have dropped from Sh2.5 million to an average of Sh1 million per acre in Kaloleni.
A similar plot at Mavueni was selling at Sh600,000, but is now going for Sh200,000.
“For the real investor, this is the time to buy. We are confident that insecurity will be contained so we are buying land from those who are worried about the situation,” Mr Majani said Thursday.
Despite the insecurity, mortgage lenders are still financing developers who, however, are holding the funding while monitoring the situation, according to Mr Paul Kinoti, a consultant at Coral Property Limited.
“We are also experiencing a situation where foreigners who own apartments in Nyali, Shanzu and Vipingo are eager to sell them due to the bad publicity out there.
“But Kenyans are taking the advantage of their desperation. Our local clients say clashes cannot stop them from buying property so they are exploiting the chance to strike good deals,” he said.
Rental prices have also been affected. “Tenants are moving out but there are those who are not worried. We cannot run away from our homes so we are putting up with the situation,” said Mr Idha Mbarak, who owns rental houses in Majengo.
Myspace Properties executive officer Mwenda Thuranira said while tenants have moved out, hospitality workers are experiencing difficulties in paying rent after they lost jobs due to closure of some hotels.
“We know this is a difficult moment for tenants since they are not working so we have to bear with them. But it’s weighing down on house owners,” he said.
Insecurity in Lamu and Tana River counties has affected businesses in Malindi and Watamu.
Hardest hit are hotels, 70 per cent of which are closed down and may not reopen despite the onset of the high tourism season.
Mr Roberto Mancini, an investor in the hospitality sector and owner of Karen Blixen, Malindi, said he was contemplating moving out of the resort town.
He said that since April, his business has suffered huge losses despite retaining all employees, when other hoteliers closed shop and reduced their workforce.
“July is usually a busy month in this town but not anymore,” he said. “The situation is bad for us and we don’t know what will come next.”