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3 Ways to Make Big Money from Nairobi Property Boom

The city’s property market has boomed in the past decade.

Updated on

October 27, 2017

Home for sale — Always be on the lookout for an undervalued property. PHOTO | FILE

Nairobi has enjoyed an unprecedented housing boom in the past decade, with land prices rising fivefold in the last five years, thanks to soaring rents and the rising demand for homes.

The high cost of land has seen developers moving away from the Kenyan capital to out-of-way locations such as Kitengela and Kajiado, thereby creating lucrative property investment opportunities away from the city.

Here are three smart ways to profit from the Nairobi property boom.

1) Undervalued property

Do some thorough research and identify areas that are undervalued.

These areas should generally have some redeeming quality such as nearness to amenities such as a good health facility, highway, shopping centre or some other desirable places.

It is an open secret that some undervalued neighbourhoods require just one property developer to come into them, buy land at a throw-away price and then put up some houses.

This kind of activity will eventually attract other investors.

Once buyers begin flocking into an area it suddenly becomes a more desirable place, which at long last attracts an increase in property value.

Mlolongo, Kitengela and Syokimau areas, which are located within easy access from Nairobi, are perfect examples of previously undervalued but currently more desirable areas.

2) Renovate

A house that is in bad shape is usually difficult to sell since most property investors either do not have the time or desire to buy a run-down property.

A savvy property investor can make some good profit by buying such houses (at low prices of course) and renovating them for sale.

3) Buy and hold

This method refers to buying a property and holding onto it in the hope that its value will increase over a while. This is very likely considering that Kenya property prices have been increasing in recent years.

Buying for the long term requires you to consider the time value of money. For example, if you buy a house for Sh6 million today and the property appreciates at 20 percent per year, after 5 years the same property will be worth more than Sh14.9 million.