3 Ways to make big money from Nairobi property boom

A home for sale.
Always be on the lookout for a undervalued property. PHOTO/FILE
Nairobi has enjoyed an unprecedented housing boom in the past decade, with land prices rising fivefold in the last five years, thanks to soaring rents and the rising demand for homes.

The high cost of land has seen developers moving away from the Kenyan capital to out-of-way locations such as Kitengela and Kajiado, thereby creating lucrative property investment opportunities away from the city.

Here are three smart ways to profit from the Nairobi property boom.

1) Look for a undervalued property
Do some thorough research and identify areas that are undervalued. These areas should generally have some redeeming quality such as nearness to amenities such as a good health facility, highway, shopping centre or some other desirable places.

It is an open secret that some undervalued neighbourhoods require just one property developer to come into them, buy land at a throw away price and then put up some houses.

This kind of activity will eventually attract other investors. Once buyers begin flocking into an area it suddenly becomes a more desirable place, which at long last attracts an increase in property value.

Mlolongo, Kitengela and Syokimau areas, which are located within easy access from Nairobi, are perfect examples of previously undervalued but currently more desirable areas.

2) Renovate a property
A house that is in bad shape is usually difficult to sell since most property investors either do not have the time or desire to buy a run-down property. A savvy property investor can make some good profit by buying such houses (at low prices of course) and renovating them for sale.

READ: Renovation ideas for small homes

3) Buy and hold for the long haul
This method refers to buying a property and holding onto it in the hope that its value will increase over a period of time. This is very likely considering that Kenya property prices have been increasing in recent years.

Buying for the long term requires you to focus on the time value for money. For example if you buy a Sh6 million house today and the property appreciates at 20 per cent a year, after 5 years the same property will be worth more than Sh14.9 million.

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