The newly upgraded Kisumu International Airport has stirred the dormant real estate market in the lakeside city.
Investors are rushing to acquire prime property whose prices have risen due to an unprecedented increase in demand.
The airport’s upgrading started in 2009 at a cost of Sh3 billion and was officially opened by President Mwai Kibaki last month. The president also commissioned a ground-breaking ceremony for the rehabilitation of the Nyamasaria-Kisumu-Kisian road, which is expected to better real estate investment prospects.
|President Mwai Kibaki officially opening Kisumu International Airport in January 2012. Photo: James keyi/Standard|
The 25km road network is being rehabilitated at a cost of Sh5.8 billion and is being contracted by Chinese construction firm, Sino Hydro Corporation.
The airport’s renovation included an elongated runway that was initially 2.1km, which was extended to three kilometres to accommodate larger international aircrafts. Currently, over ten local flights land at the airport daily compared to one or two five years ago.
As a result of these major infrastructural developments, prices of land and property have gone up considerably, rivalling those in up-market areas in Nairobi and beach plots at the Coast.
For instance, the cost of half an acre of land in the Milimani area in Kisumu goes for up to Sh40 million up from Sh20 million or less two years ago.
Ounga Commercial Agencies Operations Director, Victor Oluoch, says the upgrading of the Kisumu International Airport has redefined real estate in the area.
“It was unimaginable that people would pay over Sh30 million for half an acre in Kisumu until last month,” Oluoch says.
Areas close to the airport like Kisian, Daraja Mbili and Ojola that did not attract any real estate investment in the past are in high demand now.
“An eighth of an acre plot around the airport goes for up to Sh1.5 million up from less than Sh1 million last year,” says Oluoch.
Oluoch says the trend is also witnessed at the Riat Hills and former Port Florence where the wealthy are setting up palatial homes.
“Prospective buyers will be lucky to get half an acre at Riat for Sh3 million. A quarter of an acre fetched Sh1.2 million in the area last year,” Oluoch says.
|New residential buildings in Kisumu. The airport�s expansion has attracted many real estate investors to Kisumu. Photo: Titus Munala/Standard|
Oluoch says investors are spending Sh15 million for three-bedroom maisonettes in Milimani.
“Three months ago, buyers avoided the houses, arguing their selling price of Sh12 million was too high for a home in Kisumu,” Oluoch says.
Apartments in Milimani, an area adjacent to Lake Victoria, are also feeling the rattling effects of the rejuvenated commercial and residential real estate.
“Units at Diana Luxury Apartments currently cost Sh9 million up from Sh7.5 million last year and buyers are interested,” says Oluoch.
He adds that in spite of the high interest rates on mortgages, demand for property has increased. Oluoch says buyers are entering mutual agreements with sellers on suitable modes of payment to avoid borrowing from financial institutions.
According to Tom and Company Agencies Managing Partner Aba Eban, the sleepy Otonglo area is also a major beneficiary of the revamped airport.
“There is intense activity in real estate, but areas like Otonglo, near the airport, are major beneficiaries,” Eban says.
Eban says roads in the area were also renovated, which resulted in doubling of plot prices in the area.
“Previously a 0.1 hectares plot (less than one eighth of an acre) sold at Sh400.000, but it currently goes for Sh830,000,” Eban says.
Most of the developers scrambling for the plots are setting up residential buildings, petrol stations and entertainment spots.
Similar trends are witnessed in far-flung estates like Mamboleo where a plot measuring 0.02 hectares sells for Sh700,000 up from Sh430,000 two years ago.
“Many of the plots bought in Mamboleo are used to set up guesthouses and residential houses for the middle class,” Eban says.
Eban adds that the airport is also key in facilitating the decongestion of traditional residential estates and commercial premises.
For instance, some developers are buying land to set up warehouses along the Kisumu-Nairobi Road following scarcity of land along the Busia Road.
“Investors are spending up to Sh3 million for plots along Nairobi Road, which was previously ignored because of the area’s unfavourable soil,” Eban says.
“Some of the parcels of land were given a wide berth because of poor documentation, which has since improved,” he says.
According to Eban, the upcoming construction of bypass roads to the airport would further increase fortunes to landowners within its vicinity.
The hospitality industry is also growing. Rock Resort, for example, recently renovated its facilities. It’s manager, David Guya, says the management took advantage of the Western Tourism Circuit and the growth in Kisumu.
“We are witnessing an increase of visitors following our improved service delivery and proximity to the airport and the Kisumu-Busia Road,” Guya says.
According to the Kenya Airports Authority (KAA), traffic at the airport has increased by about 50 per cent. The official figures show that over 540,000 passengers went through the airport in 2010 up from 360,000 in 2009.
“The second phase of the airport’s expansion, which includes building cargo-handling facilities, will begin soon,” says KAA Managing Director Stephen Gichuki.
Gichuki said KAA is focusing on enhancing new business opportunities and encouraging the opening up of Kisumu.
Last year, KAA invited investors to provide aviation fuel, ground handling services and manage an automated car park.
However, the Municipal Council of Kisumu should improve its services to match the increased investment opportunities.
Among issues that need urgent attention is the installation of streetlights, road repairs within residential estates and removal of hawkers from the Central Business District.
Kenya Vision 2030 Director of Strategy Andrew Toboso says the status and strategic location of the airport in the Great Lakes is of great importance to the region.
“It means a lot in development, especially in light of the East Africa Community common market,” says Toboso.
Apart from the road network that is currently being upgraded, Toboso says plans are underway to improve the railway line from Mombasa to Kisumu.
“This will spread the benefits not only to Kisumu, but to the whole region as well,” says Toboso.
Real estate developer Eric Ounga says locals should take advantage of the airport and increase their business potential.
“Lack of good hotels, housing and serviced apartments are some of the problems visitors and tourists to Kisumu face,” says Ounga.
Ounga further urges investors to tap into underdeveloped real estate and service industry in the region.
“Locals should take bold steps and risks by investing in good facilities to attract tourists,” says Ounga.