Athi River

LETTERS: Why a solid land management policy is key to taming cartels

The ruthless cartels have nothing to lose and can gobble every available prime space, driving out any possible competition.

LETTERS: Why a solid land management policy is key to taming cartels

For the last decade, the Kenyan economy has registered a success story in the real estate sector with an average growth of above 10 per cent. The sector has constantly posted good returns of between 25-30 per cent, making it one of the most lucrative sectors in our economy. As per government statistics, between 2010 and 2016, the sector grew from 5.2 per cent to 12.3 per cent, which was more double than the average economic growth of 5.8 per cent in the same year.This growth has not only positively impacted our economy through job creation, but it has given rise to new satelite urban areas.

Towns like Kitengela, Athi River in Kajiado, Ruiru and Juja in Kiambu and the wider Nairobi metropolitan, Bamburi in Mombasa, Pipeline in Nakuru etc, have all sprung out of the real estate phenomenon. They in turn have created an economic frenzy, expanding business opportunities, pushing masses out of the central business districts as well as giving value to some previously dormant and idle land.However, due to lack of government policies and regulatory frameworks, the same growth has attracted the attention of rogue developers and financial criminals. The menace of substandard and unapproved structures has left a trail of destruction, millions of shillings lost and lives lost.Secondly, due to the complex and unregulated nature of the industry, financial scammers have had a field day. In an effort to cleanse their ill-gotten wealth, they will purchase a big chunk of land, subdivide it into smaller portions, pushing the prices up. The same individuals will also operate different registered companies and the same land is consecutively sold, moved between the companies, forming a complex layer. This practice known as land flipping and seems to be rampant in our country.On face value, these transactions look attractive and beneficial as they assist in giving the land a better price, but beneath the thin surface lies a monstrous effect to the local economies. First, it pushes the prices out of reach since the values are not pegged on any tangible value addition, but are rather based on virtual aspects dictated by a few individuals. By pushing the prices up, this distorts market dynamics, moving the sector from a perfect case of demand and supply to a monopolistic market controlled by a few cartels. The ruthless cartels have nothing to lose and can gobble every available prime space, driving out any possible competition. This later affects provision of other social amenities like security, water, access roads etc since any new entrants have to be at the mercies of the cartels. On the other hand, the flippers have gone ahead and taken the practice out of town to some rural areas. Fertile agricultural land is subdivided and vigorously marketed. Gullible investors willing to make some quick cash invest their money and sit back as they wait for the prices to double. READ: Home ownership in doubt as Sh3bn sacco shut downThe tragedy is that majority are speculators and the mob psychology that inhibits any rational thinking makes them end up in a frog and snake tale scenario with each speculator waiting for the other to start investing on their land to give them value. At the same time, the subdivided agricultural land becomes unproductive since it’s no longer in use and is economically untenable thus affecting the balance of food production. In the same key, investors lose their ability to invest as they end up with dead capital they can’t exploit.For the last few years, several attractive real estate schemes have emerged both in social and mainstream media. Modelled as flexible and affordable home ownership plans, they are vigorously marketed and needy Kenyans dreaming of owning homes and properties invest their money. Once they have collected enough, gullible investors are left either holding worthless ownership papers or with painful tales with little hopes and no options to turn to. Driving past Syokimau, there lies a whole abandoned partially done estate where hundreds lost their lifetime savings through such schemes.As the goverment pushes the “affordable housing” pillar under the Big Four agenda, a strict regulatory framework and a sound land management policy needs to be developed.

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