17/01/2023
Buyers beware: Pitfalls of off-plan housing schemes
They include Gakuyo Real Estate, Lesedi Developers, Urithi Housing Co-op, Kamuthi Housing Co-op, Suraya and Cytonn.
Banda Homes was one of the pioneers of the model.
Banda Homes, whose owner Andrew Kamau says is insolvent, went under with nearly Sh4 billion of its clients
But before Banda Homes, Mr Kamau had Dinara Developers Ltd – a company he founded with Mr Francis Wachira, who left to form the collapsed Tehilla Holdings Ltd.
Dinara Developers collapsed and Mr Kamau would establish Mashariki Developers Ltd with Mr Patrick Muchoki, Mr Paul Nderitu and Mr Martin Mwangi.
Mr Mwangi left to form Belasi Developers Ltd, which too went under.
Mashariki Developers had only one project in Kiambu and Mr Andrew Kamau would later team up with Mr Muchoki, Mr Joseph Ruhiu and Mr Paul Nderitu to form Lettas Developers that died almost immediately.
Mr Patrick Muchoki and Mr Ruhiu would later leave to form Mahiga Homes while the Nderitu brothers – Paul and Joseph – set up Nyumbani Concepts Ltd.
Mr Kamau’s chief accountant George Mburu, who worked for his companies – Lettas Developers and Banda Homes – would leave to form Mizizi Africa Homes.
Other directors of Mahiga Homes left Mashariki and Lettas Developers, which run concurrently, with former salesman Ejidio Kinyajui leaving to launch Kiambu-based Willstone Homes.
Paul Nderitu would later leave Banda Homes with sales manager Martin Njoroge, Milka Wambui and Caroline Loontubu. Mr Njoroge and Ms Wambui would form Miliki Space Ltd, while Loontubu formed Petmall Shelters.
Banda Homes and Lettas Developers CEO Fabian Nzivo would later leave and is currently a non-executive director at one of the biggest off-plan companies on Kenyatta Road.
The evolution of these companies and the exit of directors and their founders to form their own firms reveal how lucrative the sector was and still is.
There is easy money to be made as demand for housing remains high and land being scarce.
The success of these companies by then inspired many land selling agencies, among them Kamuthi Housing Cooperative Society led by its chairman Bernard Maina.
One of the projects Kamuthi Housing Co-operative Society marketed was Buffalo Hills Golf and Leisure Village in Thika, Kiambu. The marketing was based on a creative concept of a golf course and club house set on a quarter acre going for Sh5 million.
Most investors bought the idea, only to eventually lose millions of shillings with no construction on sight.
The dream of Kamuthi Housing Cooperative Society by Mr Maina would inspire his blood brother Samuel Maina to start Urithi Housing Cooperative Society that is struggling with refunds to its members for some non-existent projects that it sold to its customers in Juja, Nakuru and the Coast.
Former Urithi Housing Cooperative Society chief executive officer Kelvin Muthuri told Sunday Nation last week that he is now an associate pastor at Deliverance Church Juja, Kiambu, after the venture folded up.
Less than two weeks ago, a High Court sitting in Nairobi allowed the liquidation of investment projects owned by Cytonn Real Estate to recover more than Sh14 billion the firm owes to its investors who have been fighting for their refunds in court.
Gakuyo Real Estate has also been facing similar cases of refund claims after not delivering on its promise of affordable housing.
Four years ago, Superior Homes was entangled in a row with the Water Management Authority after the state claimed that one of their real estate projects dubbed ‘Green Park’ in Machakos County was built on riparian land.
The picture is only just emerging, but the trends so far point to a tragi-comedy about Kenya’s hilly real estate scene where vicious sharks roam and clueless victims buy into their ideas at face value, not knowing they will be mercilessly devoured.
Mr Kiragu has since registered another land selling company – Tunza Realtors Ltd – selling the same plots that Lesedi Developers is selling in Juja, Nakuru and Nanyuki... thought i should share.
