Kisumu is growing, but are investors happy?

The lakeside city has been attracting real estate investors, but as some case studies show, you should do your homework well before putting your money in any project, writes LYDIA LIMBE

The winds of change are blowing in Kisumu City. From an aerial view, one can see lots of construction sites in various parts of the city. The airport has been expanded; the road leading to it from the city centre is under construction.

In the city centre, there are about four construction sites, two of which are shopping malls: One owned by Galib Tejpar — owners of Al-Imran Plaza (which used to host the Standard Group Kisumu bureau offices), and the other owned by Tuff Form mattresses.

Uchumi supermarket has already placed a ‘coming soon’ signpost outside the Galib Tejpar mall fence. Being a small city, in about 30 minutes of being there, I get wind that a five-star hotel (the rumour pointed to big hotels like Kempinski, Sarova and Serena) would be renting the hotel space in one of the malls.

Kisumu already has a three-star hotel (Imperial Hotel) and a new luxury hotel (Sovereign Hotel) down the road opposite this ongoing construction.

University of Nairobi is putting up what will be Kisumu’s tallest building — 17 floors — as a learning centre.

Michael Osewe, the Ministry of Housing Kisumu County Director, says that apart from the increasing commercial buildings being put up in Kisumu, there are also many ministry-led housing projects in the pipeline.

“Through the National Housing Corporation (NHC), we will begin in June to build a total of 1,000 units in Kanyakwar area. The units will be both for rental and sale,” says Osewe.

In addition to the 1,000 units, the Ministry of Housing will be putting up 450 housing units at Police Dog Canteen area. The private sector is also keen on cashing in on the housing shortage that has been characteristic of Kisumu. On March 27, Home Afrika launched a new project known as Lake View Heights, which is situated on one of the hills in Riat.

The 91-acre project, poised to be the biggest real estate development in the county in terms of acreage, will be of a mixed development, complete with a conference complex, education and shopping centre.

Home Afrika Chairman, Lee Karuri, says the Kisumu project is part of their go-county strategy.

“We are very proud of venturing into Kisumu. This particular piece of land that we have acquired has a spectacular panoramic view of the lake and the city,” he said.

Lake View Heights will be a mixed development totaling 1,000 units. Currently, they have 140-quarter-acre plots for sale. Where Home Afrika is setting up its developments is considered to be ‘virgin land’, according to Aba Eban of Navic Communication, and it will take a long while before this area is taken up. Navic Communication is the organisation that organises the annual Kisumu Homes Expo.

Booming industry

At face value, it seems like the real estate industry is booming in Kisumu. Leading real estate developers like Ounga Commercial and Villa Care have luxury homes and apartments in Riat and Milimani, respectively.

But some warn that one has to do their due diligence before investing in real estate in Kisumu. They say that the market for houses is there in Kisumu. The big question, however, is: How much are people willing to pay for a two-bedroom apartment, for instance, in Kisumu as compared to Nairobi?

In Nairobi, such a house can fetch up to Sh80,000, depending on the location. In Kisumu, most people would be willing to pay Sh15,000 for such a house.

To attest to this, there is a new estate that was recently built in Riat by a prominent banker. The mix of 14 bungalows and maisonettes are going for Sh18 million. To date, more than six months after completion, the houses have failed to interest clients and there is no one willing to pay the Sh30,000 rent currently on offer.

Again, this depends on the location. Milimani has for a long time been the ‘leafy suburb’ of Kisumu. It has had all the infrastructure to support urban living. But this area is also fast changing, becoming a mixed-use location. What used to be a residential neighbourhood now hosts offices, hotels and universities.

The houses were bungalows and masionettes, but apartments are springing up everywhere. It is interesting to see how this Milimani area is fast becoming a concrete jungle. United Millers, a leading milling company, has built a new complex of town houses — United Oasis — which is said to fetch Sh300,000 in per month.

One thing that everybody agrees on, however, is that the changes around Kisumu signify growth. Oginga Odinga Street, at the Telkom building, used to have nothing apart from the long closed Kentons supermarket.

Now the space has been opened up and several M-Pesa, phone and boutique shops are lined out. An area that used to host Copy Cat Kenya office before it got burnt during the post-election violence is now an open-air showroom for Hino Trucks, a division of Toyota Kenya.

Oginga Odinga Street, which by 2009 had 22 banks, now has many more, the latest entrants being I&M Bank, Equatorial Commercial Bank as well as Rafiki Deposit Taking Microfinance. I&M has taken up a building that had been run down for a very long time, giving it a new makeover.

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