Growth of Satellite Towns Presents Young Professionals an Opportunity to Own an Affordable Home

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Reuben Kimani, CEO, Username Investment Limited.

By Reuben Kimani

The development of satellite towns has been unstoppable due to the rise in demand to settle close to urban areas by investors who would rather commute to their places of work from their own homes than rent in the CBDs for a long time. Nairobi, for example, is the 97th most expensive home-rental city in the world after renowned destinations like Bangkok and Cairo according to Bloomberg World Airbnb cost Index. With this in mind, it may take longer for a young professional to be capable of purchasing a high-end property in the city centre, therefore, the viable option is investing in a satellite town.

According to the dictionary, a satellite town or satellite city is a concept in urban planning that refers to smaller metropolitan areas which are located near to but are mostly independent of larger metropolitan areas. These towns are relatively smaller in size and share close proximity to major urban centres, for instance, Nairobi, Nakuru, Mombasa or Kisumu.

In Kenya, these areas have expanded and are gradually detaching from the cities both economically and socially thanks to the growth of infrastructure and availability of social amenities. This has made it possible to put up residential and commercial premises to meet the rising demand for accommodation and office space for businesses and the growing population. An area that has recently experienced this growth is Kangundo Road which is located in an approximate distance of 40 km from Nairobi CBD.

In Summary

  • Infrastructure spending this year on Kangundo Road rose by 38.1 percent from Sh347.4 billion in 2017 to Sh396.8 billion in 2018
  • A feasibility study done in 2016 on Kangundo Road indicates that this area had no affordable quality housing yet the prices of land were relatively low.
  • Nairobi for example, is the 97th most expensive home-rental city in the world after renowned destinations like Bangkok and Cairo, according to Bloomberg World Airbnb cost Index.
  • It may take longer for a young professional to purchase a high-end property in the city centre, therefore, the viable option is investing in an affordable land in a satellite town.

According to a feasibility study done in 2016 by Hass Consult, Kangundo Road had no affordable quality housing. The prices of land in this area were relatively low making this area attractive and easier to develop as an investor. On the same year, investors began to identify the potential that lies in this area led by Infinity Industrial Park which broke ground with a strategic location at the junction of Eastern Bypass and Kangundo Road. This mega project has gradually increased the attractiveness of this area and together with other projects will cause an upward growth in the prices of land.

The accessibility of Kangundo Road is now easier with the recent completion of dualling of The Outering Road that has eased traffic between the City Centre and Kangundo Road. This area also enjoys improved public transport making it possible for commuters to travel to and from Nairobi CBD daily. This has seen businesses open up in the town which now boasts of supermarkets, hotels, markets, schools and medical facilities. Additionally, Kangundo Road is an agricultural rich Sub County suitable for farming especially to young professionals who can commercialize agriculture and contribute to food security.

The increased spending on infrastructure this year on Kangundo Road rose by 38.1 per cent from Sh347.4 billion in 2017 to Kshs 396.8 billion in 2018. The Kenya National Highways Authority has already earmarked Kangundo Road for an upgrade to a dual carriage road.  Not to forget, there are ongoing key strategic roads including the 72-kilometer Konza- Machakos-Kangundo-Kennol road whose construction was awarded Kshs. 4.3 billion. These developments will make the area capable of hosting a great deal of high-end economic activities coupled with easy access to Nairobi.

In conclusion, the real estate sector has experienced a booming growth this year and young professionals should consider looking out for reputable companies and invest in affordable land in satellite towns such as Kangundo Road. This will help them grow their land investment portfolio before the full establishment of these areas.

The author is the Chief Executive Officer, Username Investment Ltd.