Infrastructural Development Opens Up Real Estate Across Kenya

Thika Superhighway | Photo: Jambonewspot

Thika Superhighway | Photo: Jambonewspot

Across the globe, Real estate and Infrastructure have always had close ties. Infrastructure developments often open up dormant areas and attract developers, which potentially generates high yields on investments.

Case in point, the construction of the Machakos People’s Park and the refurbishment of the town’s once grass thatched ‘stadium’ into a functional entity with decent amenities. Kenyans, and mostly those from the affluent Nairobi, Nakuru and Mombasa neighbourhoods have repetitively flocked to the ‘almost capital’ to enjoy the new attractions. A drive down to the town and it’s not difficult to notice the emergence of hotels, restaurants, tarmac roads and lots of other complimentary infrastructure.

Developers are integrating infrastructure facilities in their development plans, creating traffic to their property. In developments such as gated communities and large scale housing estates, it’s common place to find, as standard features, proximity to malls, or upcoming malls, shopping complexes, green areas and parks, gyms and swimming pools, amongst a host of other amentities. Infrastructural development lures real estate developments due to the appeal of the area. Roads infrastructure, for instance, has opened up areas influencing property value, prompting the appreciation of prices in adjacent areas.

This would explain the high density effect the construction of by-passes across Nairobi has had on once exclusive and pristine neighbourhoods as Kileleshwa, Runda, Lower Kabete and Lavington. The roads that traverse these landscapes now have adversly opened up areas that were once inaccessible and reserved.

Lamudi MD Dan Karua says, “Projects like Lamu Port Southern Sudan Ethiopia (LAPSSET), the Thika superhighway, bypasses like Eastern, Southern and Northern, and the restoration of other roads have made the property prices in these areas appreciate drastically. Developers are benchmarking value of their property based on proximity to these areas.”

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Airports aren’t being left behind, also undergoing development, with the major example of this being Jomo Kenyatta International Airport. Here the opening of Terminal 1A and the construction of the Greenfield Terminal which kicked off construction late last year, is set to boost the Airport’s status as an international hub: As Kenya is the major economic hub in East Africa many international firms will set their base here.

Development of the Commuter Railway System around Nairobi and the construction of the standard gauge line from Mombasa to Kisumu will widen the catchment area of real estate developments. Often perceived as far-flung and difficult to reach, areas like Kitengela, Athi River and Mlolongo have now experienced unprecedented growth with the Syokimau Railway line.

Savannah Silicon

Developments in the ICT sector have also facilitated the development of these areas as Konza City is to be constructed in this region. In addition, over 90 percent of Kenya’s population now live within GSM signal range: one of the highest rates in Africa, a good indicator for the telecommunications sector in the country.

“The Ministry of Energy and Petroleum plans to inject 5,000MW-plus into the national grid increasing Kenya’s power capacity to over 6,700MW, by the end of 2016. The result is expected to be cheaper electricity and increased capacity in the grid,” Karua noted.

The Power Sector has undergone reforms that have led to efficiency gains of 1 percent of GDP. Part of Kenya’s Vision 2030 is to enhance the production of affordable and reliable electricity of energy generation of 23,000 MW from the current 1,735MW. A nuclear energy plant is to be set-up by 2022 which is expected to generate 1000 MW, coal mining is about to be started, geothermal energy is being boosted this is to deviate from the dependence of hydroelectricity which isn’t reliable. In the case of the water sector, Kenya has already established a Water Resource Management Authority.

Expansion and growth of infrastructure is imperative to real estate developments. The high property prices are reflective of the valuation property investors are taking to determine the value of their land or rent charged.

Luxury Has a New Address

There’s no denying that there is the established luxury syndicate in any part of the globe, be it New York or Hong Kong, even right here in our beautiful green city in the sun, Nairobi. There may be three social classes: the recurrently poor, the sprawling middle class and the wealthy… but to the rich there are four classes: the servants (the poor), the pretenders (middle class), the detestable ‘new money’ who feel they have achieved this position of power and will stick there, as well as ‘old money’ from a long line of the elite.

I wasn’t much surprised then when I found out that plush and upmarket neighbourhoods such as Muthaiga don’t just let anyone into their back yard: you have to be from a long line of wealthy Kenyan citizens, in other words ‘old money’. As a result, it’s like we’re playing a new kind of colonial game. A resurgence of segregation not based on race this time, but on possession. Never in modern Earth’s history has materialism controlled human desire to such extraordinary extent.

I was recently reading an article about the 1971 Iranian Monarchy celebrations that took place over a period of roughly two weeks. Basically, the Persian monarchy was celebrating its 2,500th year of existence, right from the time of King Cyrus the Great’s rule, and was meant to demonstrate Iran’s long history and the extent of contemporary advancements the ’empire’ had achieved under the time of the then Shah of Iran, Mohammad Razah Pahlavi.

Aerial view of the Tent of Persepolis

The preparations for this historic event took well over a decade, as a remote city, Persepolis, was identified to host the modern milestone mainly because of security issues that would make it easier to monitor. The infrastructure of the city had to be extensively improved, including the upgrading of nearby Shiraz Airport and an additional highway for the anticipated number of high profile guests. The support staff and press were based in Shiraz as only the invited guests and dignitaries would be staying in Persepolis.

The Tent City of Persepolis (Photo: David Dorren)

The Iranian government flew in plants from France, and even hired the exquisite Parisian restaurant, Maxim’s to cater for the entire event (Maxim had to shut down its operations in the French capital for the duration of the celebrations). The Imperial household had elaborate uniforms designed for them as well and 250 custom made red Mercedes benz sedans purchased to ferry guests to and from the airport at Shiraz.

The venue of the Tent City of Persepolis was set on over 160 acres of land: luxury tented apartments adorned in the finest of gold and linen, all designed in a star shape around a graand fountain at the centre of the lay out. The inspiration for this was the 16th century Field of the Cloth of Gold that bore the Anglo-French treaty of 1514. In total, 600 guests, including a long list of Eurpoean royals and African presidents, dined for over 5 hours, making it a Guinness World record for the longest and most lavish official banquet in modern history.

The Persepolis Banquet

If you were wondering where the notion ‘the party of the century’ came from…well there’s your answer. There has never been such an extensively lavish and grand gathering, to date. President Jomo Kenyatta, Queen Elizabeth II and President Richard Nixon did not attend though, because of ‘security concerns’ though I would rather much bet it would have been Israeli influences and reservations.

Nairobi has its fair share of opulence when it comes to fine dining and accommodation. We have the ‘old money’ hotels that include the likes of what is now the Sarova Stanley, the Fairmont Norfolk and the Nairobi Serena, as well as the ‘new money’ creme that harbours the Sankara and the Tribe Hotel. It’s no secret that the middle class is growing, and the rich are getting richer, and with the city being a diplomatic and celebrity haven, we’re likely to see more ‘high end’ focussed offings taking shape.

Read my piece on Princes and (mostly) European palaces

It is also predicted that by just 2014, East and Central Africa’s financial and communication hub will see its bed space more than double, with international hotel brands, the Chinese and a plethora of local and international investors displaying their might. I’ve heard but rumours of Sheraton, Marriot and Hyatt even prospecting how and when they would set up shop in what is the Safari Capital of the World. And with news that Nairobi’s luxury property is a hot topic on a global scale, the only hinderance to this becoming a ‘wealthy and elite’ jungle is… time.

One of the avenues I think is most underutilised in Kenya is the fact that we are the only ‘Third World Country’ with a United Nations agency headquarters. According to the recently released Wealth Report though, experts were asked where they saw the world in the year 2050. A general agreement was that dominant global cities would be overtaken in importance and precedence by a group of cities networked.

Of course then in such a scenario, at the top of the list was Washington/New York/Chicago, followed by Hong Kong/Shanghai/Beijing. In the first scenario, the consensus was that the three cities would geopolitically become more important than the whole of the United States by then, also attributing this to the fact that when the Chinese premier Jintao visited, he not only went to the American capital, but also stopped by Chicago. The second scenario doesn’t need much convincing, as China’s global role perpetually continues to be ingrained.

The merger of the ‘Diplomats’ Geneva/Vienna/Nairobi

A series of groupings followed, including Berlin/Frankfurt, Istanbul/Ankara, Sao Paolo/Rio/Brasilia and Cairo/Beirut. The interesting addition was the mega connection that is Geneva/Vienna/Nairobi which Prof. Saskia Sassen, the writer of the section of the report, said was a critical mass generated by a combination of institutions devoted to social questions and justice for the powerless. She said the cities may have been long overshadowed by global finance and mega-militaries but they would emerge as critical actors in the global arena.

No wonder hotels like the Tribe, pride themselves as being at the heart of the city’s diplomatic street. Popular travel and leisure magazine show ‘Jet Set Extra’ was recently in the country to ‘experience Africa’ and here’s the brief clip and interview with the Hotel’s General Manager, Mark Somen.

Jetset Extra Visits Nairobi’s Tribe Hotel from Jetset Extra on Vimeo.

Is it surprising that Wikipedia defines ‘jet set’ as: a journalistic term used to describe an international social group of wealthy people.

Great cities like New York and London were built on the sweat of a dedicated generation that forged together with a general purpose of making their city the best…not for others, but for themselves.