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County governments encouraged to invest in infrastructure projects

Devolution as the next frontier for property development has started to take shape, with increasing potential for rural towns to be transformed into future cities and and urban centres. The real estate sector has further been bolstered by the devolved system of government which has created investment and development opportunities in counties.

A number of county governments are extending support to property investors to encourage them to invest, tapping on prospective clients in major towns who are keen on owning homes in a rural set up which at the same time make them feel like they are living in an urban setting.

Kiambu, Kilifi and Meru are classic examples of counties set to pick up as future cities, after the county governments set up financial support to improve infrastructure. Meru county, for example, has set aside Sh100 million, while Kilifi is keen on developing roads in the county to encourage real estate developers.

Meanwhile, Kiambu county has digitised its land registry office. This has coincided with the release of a World Bank report, titled Kenya Urbanization Review on the potential of counties and village upgrades to cities and town status, which says that devolution poses a particular challenge for provision of some urban services, at least in the short term.

“This is partly because most counties are predominantly rural and have less incentive to invest in urban areas,” the report says. The report also notes that devolved units need to give infrastructure serious thought if they want to attract the urban-rural influx, because Kenya is urbanising at a faster pace than devolution will accelerate, advising that urbanisation will result in improved economic opportunities and living conditions of locals.

New concept

In Meru county, the much hyped Sh3.7 billion shillings Development Real Estate Investment Trust (D-REIT) concept property, Greenwood City, is one of the beneficiaries of the county’s initiative and is set to be completed next year.

The property is a development by real estate developer Fusion Capital snf TT Africa Fund to encourage urban-rural migration. According to the Group Chief Executive at Fusion Capital, Luke Kinoti, Greenwood City in Meru, the first D-REIT investment in the market was conceived with county governments in mind.

“Elites and other professionals in urban areas want to go back ‘home’. But they need an environment that is urban to live and work in, while at the same time being closer to where they grew up,” Kinoti told Boma. He defends Meru as a location for business. “Meru has been underdeveloped, but is a good location for investors to consider,” he said.

Located in a prime location within Meru town, construction on the mixed-use development, which will comprise a shopping mall, an upscale office block and apartments, has already begun. Fusion Capital’s Daniel Kamau says the 53 living units are striking a chord with the middle class, demonstrated by the demand for the homes.

This is despite a three-bedroomed apartment going for Sh13.5 million and Sh10 million for the two bedroom units, a relatively high price. Besides being an agriculturally productive catchment with a cash-rich economy, Meru is underserved with similar developments.

“Greenwood City was conceptualised to meet this need and provide first-class shopping and executive residential accommodation for a growing and vibrant middle class and office space firms doing business in the region,” says Kamau. “Neighbouring counties such as Embu, Nanyuki and Isiolo will also benefit. The development provides a model approach for other counties we are targeting,” he adds.

Increased investment

In Kilifi, investors are now scrambling for the Sultan Palace Beach Retreat following the commencement by the Kilifi county government of works to tarmac a 2.5 kilometre dirt road which leads directly to the development. Poor state of roads has been a serious stumbling block for property developers on one hand, while on the other, has also hit at tourism revenues.

The road will also benefit other developments. “Kilifi county government is committed to promoting local and foreign investments in the county through improved roads, among other expansion plans,” says the county’s Chief Officer for roads and infrastructure, Kenneth Kazungu.

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