NAIROBI, Kenya, Dec 7 – Poor physical planning in majority of local authorities will kill investors’ interest in real estate and compromise property prices in the long term.
Trade Minister Amos Kimunya said unstructured physical planning has exposed some prime properties’ value decline and exposed developers to unnecessary financial risk.
‘‘It is unacceptable for an investor to put a prime residential or commercial property which gets surrounded by illegal structures years later,” said Mr Kimunya during the official opening of the Nanyuki Mall.
Mr Kimunya said it is only those local authorities that engage in structured physical planning that will attract investments in real estate because investors will not want to suffer financial risk due to poor planning.
‘‘Local authorities must place a premium on property developers to attract investments. Failure to do so means that some local authorities will suffer lack of developments,” Mr Kimunya said.
Industry analysts said that some developers were unable to repay their loans or attract tenants because of mushrooming illegal structures.
“Some investors have suffered foreclosures and unnecessary financial stress because of poor physical planning,” Nanyuki Mall Director and property consultant Reginald Okumu said.
Mr Kimunya challenged local authorities to work closely with investors and property developers to ensure that all physical planning makes property prices to appreciate instead of some incidences where prices decline.
Lack of capacity and leadership in majority of local authorities has exposed investors in the property markets to financial risk because the return on investment has been compromised by construction of illegal structures next to prime properties.
Mr Okumu said that local authorities must place a premium on physical planning otherwise the market will experience imbalances.
“It is only local authorities that are sensitive to property developers and investors interests that will attract investments in real estate. No single developer would want to incur liabilities and property value decline because of poor physical planning,” said Mr Okumu during the function.
The Nanyuki Mall that was financed by Savings and Loans, a Kenya Commercial Bank subsidiary has changed the socio-economic lifestyle of the region.
“The opening of the Nanyuki Mall will save residents the pain of having to travel to Nairobi to do shopping with all major brands like Nakumatt, KCB, Sherlock’s Den, Safaricom and CFC having taken position at the mall,” said Mr Okumu.