It is often said that real estate is one of the safest investments one can invest in. A big number of Kenyans make it their life’s goal to buy at least one piece of land, on which they go on to put up a home.
Those who can afford it, buy multiple parcels of land, sometimes in remote areas, with the expectation that the future returns will mitigate the cost and risk.
There is also the chance of regeneration of the area in which the land is located, usually due to government initiatives, or an influx of people, meaning that piece of land will be in high demand for either commercial or residential purposes.
But there are others who purchase land without a plan to develop it, yet they spent their life’s savings to buy it, and since they lack further funds to develop the land, may have to wait many years before reaping from their investment.
This is the situation that many Kenyans who buy land in remote areas, and in some cases rural areas, face.
The question, therefore, is, should you invest in real estate in far-flung areas, or should you steer clear of this form of ‘dead capital’ as Professor Bitange Ndemo once called it?
What he was inferring to is a term that was first coined by Peruvian economist Hernando De Soto to explain capital in the form of a property which is considered lost value because the owner is not able to transfer or leverage the property for capital or capital access.
Traditionally, properties in rural areas attract little or no interest whenever financial institutions are approached with the units as security. In instances where banks agree to take up such securities, valuation is often dismal compared to similar units in major cities even when the expenditure in terms of costs of building materials—outside the cost of land—is the same.
Username Investment Limited CEO, Reuben Kimani gives a comprehensive outlook on this topic.
Rural Kenya makes up over 82 per cent of the total land mass, confirming the high potential that these areas possess for development. Some areas are not habitable, while others are set aside for the natural environment or farming, but this still leaves huge tracts with the capability of being developed into urban areas. The farming communities often have their own distinct society where they build homes, cantered on their farms, and this creates room for developers to buy up land and promote urbanisation.
In the realm of real estate investment, the allure of bustling urban centres has long overshadowed the hidden treasures scattered throughout rural landscapes, however, astute investors are increasingly recognising the untapped potential and profound allure of rural Kenya’s real estate market.
To start off, we need to ask ourselves why people build houses. One of the main reasons is to have a place to live. Basically, a safe place for their children to grow and thrive.
In addition, the desire to have a space that reflects your personality and lifestyle is a motivation for those looking to build either a house in the rural areas or one in urban areas.
Additionally, building a house is a good way to build wealth and ensure financial stability. As we all know, real estate is one of the safest ways to build wealth through appreciation.
There are more reasons why people build homes in rural areas. They may build for their parents with the aim of developing where they come from or upgrading their parents’ lifestyle. Others do it for status and prestige – having a home earns some people respect within their circles and spares them embarrassment when friends and peers visit their rural homes.
Still, others put up homes in the rural areas so that when they retire, they can have a place to call home. Cultural beliefs also influence this trend. In some communities, men are expected to own homes in their ancestral home, regardless of the number of times they visit.
Still, there are those that do it with the intention of creating a legacy, a lasting reminder of the person who built the home, a place where families can gather for generations to come.
Building whether in the rural or urban area, is not a one-day decision, it is influenced by several factors that shape individual perspectives. Some of the factors include goals and objectives, family needs, convenience and availability of amenities. All these factors determine when and where one will finally settle and vary from one person to another.
The first question you need to ask is why you are building. Is it a house to live in now with your family, a retirement home, or a vacation home? When and where do you desire to build a home? If you answer these questions, it becomes easier to decide where to build.
Does your family live in the city? Which type of home do they need, is it a rural one or urban one? How will each benefit them? These are critical questions that help you identify the immediate needs of your family and help you make a better decision.
If you work and live in a city, you will need to factor in convenience when deciding where to build your home. The aspect of convenience will also greatly influence where you will put up a house. For the sake of your convenience and that of your family, make the right choice.
Access to amenities may be more limited in rural areas. You may need to pay for the installation of utilities such as water, sewer, internet and electricity. Most rural properties do not have such connectivity in comparison to the city.
With the growth of devolution, a small town can offer the best of countryside and city life.
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Affordability:
Diverse land types:
Tourism potential:
Agricultural investment:
While rural Kenya’s real estate market holds immense promise, it is not without its challenges and considerations:
Infrastructure -
Regulations and land rights -
Market knowledge -
Property management -
Eco-Lodges and holiday homes -
Agricultural ventures -
Residential development -
Recreational centres -
Conservation and eco-projects -
Local partnerships -
Due diligence -
Infrastructure assessment -
Diversification -
Long-term vision -
Neutral ground -
In conclusion, building or investing in a rural or urban area should be informed by your needs, preferences, goals, and priorities. Do not invest your life’s savings in your rural area when you spend most of your time in the city, but if you can afford it, go ahead and do it, but only if it meets a particular need.
