09May2024

Mwathane Mind the economic viability of the numerous "plots for sale schemes"

LAND REFORMS IN KENYA AND AROUND AFRICA

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Mind the economic viability of the numerous "plots for sale schemes"

Posted by on in Land Purchase
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Inaccessible, unserviced plots

Some of my most trying moments come when and from where least expected. Like when someone you know requests to be shown some plot far out in the middle of some vast undeveloped zone where the costs of relocating the perimeter boundaries would look disproportionately high. Let me share two such experiences. In the first one, someone needed to be shown some plot in interior Kajiado County, far off from any known landmarks. The other was off Kangundo Road, but so far interior that even the owner could not sufficiently describe or remember the location. In each of the cases, the investments date back years, certainly not less than ten.

The plots were derived from sub-division schemes where some investor bought some piece of land and subdivided, generating hundreds of small plots for sale. These were then offered for sale and aggressively marketed through social networks, local newspapers and radio. This commoditization and commercialization of land is becoming a vogue business model with some real estate actors. Sizes of resultant plots have been standardized at fifty by one hundred or one hundred by one hundred feet in width and length. For the majority who prefer dealing in the imperial system of metrics when handling matters land, this translates to about one eighth or one quarter of an acre respectively. But in an attempt to maximize profits, some dealers are even going lower, to one sixteenth acre plots.

In the subject sites above, there were no serviceable access roads, power, water or sewer services nearby. After viewing the plots, the respective owners returned to the city and waited for “development to get nearer”. Close to two decades later, it has not. But the owners continue to hold their title deeds as they wait in hope.

Fragmentation of agricultural and grazing land

The above experience allows us to enter discussion on a public matter that is yet to fully unfold. Various questions beg. How far shall we go in fragmenting agricultural and pastoral land as we scale up the above business model? How come the organs entrusted with approval, usually the land control boards and county government planning units, allow this practice to continue unchecked? Is it that they lack the necessary technical capacity or that they have become partisan facilitators? What will be the future of some of these schemes where many tiny unserviced plots stand “in the middle of nowhere” and are hence unsuitable for commercial and residential purposes, yet are singularly inadequate for pastoral or agricultural activities?

These few questions, among the many pertinent ones that beg, suffice to bring out the dilemma we face. Looked at from a profit perspective, the schemes make sense. The scheme drivers make quick cash. But the beneficiaries and county governments lose out. Investment capital, which could perhaps be committed to other faster options, end up tied for long periods of time as in the above cases. The county governments also end up with land use planning challenges and unjustifiable pressure for provision of services. Therefore, much as there’s a strong case for investor gains, there is a weak one for the beneficiaries and public interest. Striking a balance on this will hence be hard fought since a convergence is recipe for political and executive influence.

But County governments which wish to stem the practice will need to be prepared to take heavy punches from investors who have mainstreamed this model! At the same time, landed and built environment professionals who facilitate the planning and implementation of the schemes, yet knowing that they undermine land use and are unviable for the individual buyers, should be bolder and advise otherwise. While they await the anticipated land use plans, County governments could meanwhile issue interim guidelines to land control boards within their jurisdictions so as to avoid escalation of the practice.

Young investors beware

It also behooves us to advise young investors to watch out for some of these rather attractive but unrewarding investment options which ultimately tie up their capital and savings with little hope for returns in their prime. But this caveat mustn’t be misperceived to include investors who have invested in gated communities in strategic locations off highways or peripheries of urban centres. Most such investors have preceded the developments with the construction of good access roads, the provision of power, water and even fibre optics for internet supply in some cases. Such investments, which escalate housing for needy Kenyans, enhance group security, reduce the costs of utility services and alleviate our housing deficit. No one should expect large plot sizes in such circumstances unless where developers deliberately wish to provide graduated plot size categories at different purchase or rental rates. Gated communities should be indeed encouraged in the interest of optimizing on the rapidly shrinking urban and peri-urban spaces.

Overall, this challenge amplifies the need for the expedient implementation of our land use policy. The national and county implementation organs need to be put in place urgently. Enough work here for our Governors and the state Ministry of Lands and Physical Planning.

Dated 17th November, 2018

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