Nairobi auctioneers have put on sale a Sh1.19 billion residential estate in upmarket Kitisuru estate, citing the developers’ failure to settle a bank loan.
The notice, published by Valley Auctioneers, invites potential buyers of the estate to attend a fire sale event on February 15, signalling distress for off-plan investors who were to pay Sh10 million for the homes and have since been booking big gains in their investment.
The estate sits on a 5.23 acre parcel of land in the wider Kabete area of Kiambu County and features more than 100 three-bedroom maisonettes.
“The development comprises 119 three bedroomed flat roofed maisonettes each with a master ensuite, a club house, a swimming pool and a borehole,” says the notice.
“All interested purchasers are required to view and verify details of the financiers. A deposit of 25 per cent must be paid in bankers’ cheque or RTGS during the day of auction and the balance within 60 days.”
Developers of the estate, Homex, had set the price of each off plan development at Sh10 million, setting the minimum possible value of the development at a value at Sh1.19 billion.
House prices ordinarily go up on completion of construction, which means the maisonettes are now probably worth much more than they were before completion.
The Business Daily had not established how many buyers have paid so far.
“Tough economic times”
An official of the development declined to name the bank involved, but promised to get back with additional details “after consultations with senior managers”.
He blamed “tough economic times” for the situation but promised to issue additional details.
The official, however, later said the developer was not keen on discussing details of the auction. Some developers have recently complained of inability to sell newly-developed property in the wake of a significant fall in asking rents and sale prices.
The dip in prices and the slow uptake of newly-built units have raised fears of renewed pressure on developers, who borrowed to fund for-sale projects as obligations mature.
Real estate firm Hass Consult in July said investors had adopted a wait-and-see stance, significantly reducing the volumes of transactions in the sector.
Hass Consult also said that land owners in exclusive suburbs like Karen and Muthaiga have recently been putting up their land for sale, a phenomenon unseen previously.
Hass Consult research and marketing manager Sakina Hassanali linked the trend to price stability in the affluent suburbs and a liquidity crunch, which has seen land owners move to liquidate their assets.
“When you see older exclusive suburbs putting up land for sale it’s an interesting development because such property have been held for a long time. It has been very hard to find landowners selling in Muthaiga and Karen,” she said.
The New Kitisuru Gardens estate that is set for auction is a gated community.
“Kitisuru Gardens property includes a swimming pool, two children play area, three clubhouses with a gym, four boreholes and five landscaped gardens,” Homex says in its website.
The developer Homex Housing Limited describes itself as “a private residential real estate developer and homebuilder” engaged “in land acquisition, development and sale of residential properties since 2010”.
The company has listed on its website eight other residential projects it is developing in the outskirts of Nairobi city.
The list includes Kabete Palms, whose 3 bedroom houses go for Sh12 million, Kitisuru View apartments whose 2 bedroom apartments go for Sh6 million, Homex Villas whose 3 bedroom stand-alone houses go for Sh36 million and Villa Maya, whose 3 bedroom houses go for Sh4.5 million.
Others are Homex apartments and the Maya apartments whose 4 bedroom units are going Sh18 million. The company boasts of ability to construct a housing unit in under a week.
The firm has listed four officials, including two accountants, three marketing agents and an architect as the key team running its operations.