Property rush: Kenyans lose millions in bad investments
Thousands of torn greenhouses stretching hundreds of acres stand abandoned in various locations in Kajiado County.
The flush green has disappeared. Water has stopped flowing. Wind has blown off the roof of a number of greenhouses. Most are rotting. The lucky ones still standing either have their external covers tattered or bending on one side.
A number have just been flattened. Dry thicket in the greenhouses tell the story of a failed venture. Some have never seen a crop planted or harvested.
Dust and unforgiving heat threaten to consume the rest. The greenhouses tell a story of pain for hundreds of bitter city investors who have lost over Sh3 billion in untested agro ventures through that spread like the Kajiado whirlwinds before collapsing even faster.
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At the heart of these ventures are youthful millionaires freshly minted from the real estate sector, talented marketers and clueless but desperate investors.
Behind the implosion of these real estate ventures is a bulging list of victims that fell for sales talk and splashed money into nonviable schemes.
An investigation by the reveals a pyramid like scheme, which started like all good ideas but taken over by greedy entrepreneurs who promised handsome returns to their clients to hook them and then abandon them mid-way, sinking over Sh3 billion in their wake.
Selling land in the middle of nowhere was increasingly becoming a nightmare for some land selling companies. Their armies of salespeople were increasingly finding it harder to convince buyers to purchase land in rocky, inaccessible areas.
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They first introduced free bus rides to the sites. Then it was free lunches.
Greenhouses was just the icing on the cake. They would promise decent returns to would be buyers as an answer to the difficult question on why someone would splash their money in the wilderness.
Greenhouses would unlock potential in these parcels as they waited on the government to build roads and connect the areas to the national grid. It was perfect. Agro-ventures were the antidote that gave the necessary assurance that their money was not going into nothing.
The too trusting investors put in money even before visiting the sites. The more skeptical ones took the free bus rides to Kitengela, Isinya, Kajiado, Thika, Mt Kenya, Aberdares and other potential sites.
At the sites, they found a number of greenhouses, well-kept and fully productive for show. After the visit, most would be convinced to invest, leave their bank accounts with the company and just wait for their returns to trickle in from the comfort of their home.
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But besides the land purchase contract, they were given other contracts to sign, contracts that would introduce third parties to run their agro ventures, indemnifying the land buying companies from any losses that would come to haunt them later.
Some of the lucky few who first bought into the dreams were paid from money generated from other projects, to cover the losses and keep the dream alive.
Like all other businesses, it was hoped they would turn around and become profitable. Those who were paid were happy to be used as testimonials to the new buyers and offer the projects the legitimacy they needed to get a mass buy in. And the rush for a piece of the action started.
A number to date have no idea where their plots are to date, having jumped on the buying spree so as not to ‘miss the investments of their lifetime.’
Influential radio presenters would be roped in to further legitimise the scam and convince fence sitters to make the jump and buy. But when the time to start receiving money in the bank accounts came, the buyers waited to see a change. Nothing happened.
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One of the earliest adopters of the ventures was Property Reality Company Limited (PRC), who engaged another firm to run the greenhouse project.
When we visited one of PRC’s projects in Isinya last week, we found the green hard been replaced by a painful dry thicket. Little or no farming has happened in hundreds of greenhouses spread on over 20 acres for a year.
The gate is permanently locked and you cannot visit the site unless with express permission from Nairobi. The three mobile numbers prominently displayed to buyers on a big banner during the buying frenzy, no longer go through. The banner has been uprooted and stored in the compound, next to the rusting greenhouses.
Besides the greenhouses, the company is still struggling to give titles to its clients, some stretching for over three years.
“I bought three plots in Mt Kenya and three years later I have never seen the title,” Chrispine Ojiambo, who now wants PRC to refund him Sh898,000 said. Mr Ojiambo says every time he has visited the company, he has found new people who start his case afresh. He is among the lucky ones who bought land before the greenhouse craze started.
Brian Gacari, PRC CEO says the company learnt its lessons and stopped before it is too late.
“We should never have trusted a third party,” he said, pointing his firm’s troubles to another firm contracted to do the greenhouse part. The firm had built about 500 greenhouses before the burst. He says his firm is lucky to have known when to stop.
“There was a lot of demand and Kenyans are excited with projects that have returns. Most firms kept going and did not know when to stop,” Gacari said adding that the demand would have seen them and the rest of the industry put upwards of 5,000 greenhouses easily.
He says PRC has gone to great lengths to compensate its customers. Some were given extra parcels valued at Sh250,000. Gacari said some were given Sh250,000 off the next parcel they bought.
“We have a lot of engagements with our customers and we told them we could not compensate all of them in cash. We offered some to pick parcels from our land bank as compensation. If one purchased an extra plot, we sold it to them less Sh250,000,” the CEO said.
Going forward, he says he is engaging about two suitors to lease the remaining greenhouses for farming. But he cannot name these firms interested in the project.
But nothing defines the property scam than the projects done by yet another company in Kajiado.
The company, name withheld, has presided over the biggest collapse of these ventures and markets itself as the number one property investment solution provider in town. A tour of its projects spread revealed a deplorable state of affairs. Water has stopped flowing. Wind has blown off the roof of a number of greenhouses. The lucky ones to remain standing have their external covers torn or bending on one side.
A number have just been flattened. Dry thicket in the greenhouses tell the story of a failed venture.
An investor was to buy an eighth of an acre on which greenhouses were to be built. Each customer was to part with about Sh450,000 for the land and an extra Sh290,000 for the greenhouses.
We first contacted the company for a comment in October last year through its official information email to get a feeling of just how it treats its clients. But nearly four months down the line, no one has responded.
When we called their sales team, they asked us to leave them our contacts so that their marketing boss will call us after establishing the facts.
In one case, an investor – Ms Isabella Kerubo was given plot number is 761. She sat back and waited like hundreds of other investors, in vain. Ms Kerubo told us how she had been duped into sinking her money into the firm on the promise of handsome returns.
Her documents indicate she bought a plot and a greenhouse from the company but she feels cheated since she has never received a penny from her investment.
“If they don’t take responsibility for their economic crimes, they have better close shop because we will not let them continue conning people,” another angry customer writes.
The Consumers Federation of Kenya (Cofek) says it has received hundreds of complaints on these property scams.
“Some of those who have raised complaints include prominent government officials who are too embarrassed to come out. But there are three members of parliament who are protecting these firms,” Stephen Mutoro, the Cofek boss said. When we called this week, Mr Mutoro was receiving another case on the same.
The federation says it has been doing consumer sensitisation and warning Kenyans not to be fresh victims of the con.
“These companies are now changing their names. Others register completely new companies and use proxy directors but they are the same people,” Mutoro said.
Mutoro says despite its warnings on its social media sites, new buyers are still being recruited.
To make it worse, there is no one that regulates the property buying companies, and this he says has only helped to make the problem worse.