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How Desirable Is Land Speculation ?
Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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Just like stocks there is the strong believe that buying land , holding it for a while is a worthwhile business as you will always make gains, as land prices have one direction in black africa =====> UP & UP. This looks very predictable and easy. My take on this is that the idea of speculating on land is an illusion. This is because your called gain is very small. You optimize your gain when you develop your plot to collect rental income or sale the deveoped plot at a far bigger premium. Land is just a raw material, the finished product is a house. There is more remarkable gain or premium if you develop your plot before you contemplate selling. If you do not have the finances, you can hold it for a while which makes it appreciate further before you develop. Vision always precedes provision, where there is a will there is always a way, it is just a question of time. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Member Joined: 8/29/2008 Posts: 571
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Land keeps going up....unlike stocks which go up and down.The gain is not minimal as some one said here....sometimes(see business daily,about 2 days ago)the prices double in a few months.However,the land price maybe higher than stocks and it might need more initial capital.In land,you don't go wrong....unlike Mumias,Neveready,EA Cables......etc
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Not true that land will always go up up up. You have to look at each case separately. It makes sense to speculate in areas where the value is being unlocked by infrastructure like thika road, bye passes and mombasa road but it doesn't make sense to speculate in idle land in areas that were previously upper class and are now turning middle class like milimani and kile. Life is short. Live passionately.
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Rank: Member Joined: 8/29/2008 Posts: 571
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I know most of you don't want to believe that land might better than stocks coz it doesn't go down in price as such.Most of the people here have bought stocks and not land.Now that we are heading to 2012...land might be safer than those god-forsaken stocks because of our love for the "culture of impunity",So;I guess Robert Kiyosaki was right after all.Invest in real estate.Forget those BUY Lists from your god-forsaken broker.By the way,real estate out-performed stocks in the last ten years......
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Rank: Elder Joined: 5/30/2009 Posts: 1,390
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Land just like stocks requires some study.Like Sparkly mentioned, follow infrastructure and you wont go wrong.The good thing with land is that its value never goes down even when its use changes to a lower class.Land will lose value only if there is war.It's also easier to analyse than stocks which require greater technical analysis skills.The problem with land is capital outlay and its illiquid nature What a wicked man I am!The things I want to do,I don't do.The things I don't want to do I find myself doing
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Rank: New-farer Joined: 11/25/2010 Posts: 5 Location: Nairobi
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Some of the most successful people invested in both stocks and land.It depends on once choice of investing mode. I prefer land over stocks based on the fact that in most cases its value goes up more easily than stocks.Unlike stocks ,land value is not affected by as many factors. HARD WORK BEATS TALENT WHEN TALENT FAILS TO WORK HARD
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Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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Land is NOT inherently better than other investments... There are MULTIPLE factors to consider... [& Due Diliogence] In Kenya, land prices have fallen during moments of crisis e.g. 1982 or 2008... Fraud remains a huge problem. We have seem how Land Buying Companies scam poor Kenyans. We have fake Title Deeds. Land can be 'grabbed' by politicians. The increase in Land prices cannot continue much faster than the economic growth for very long... The overall economy has to grow. Land by itself has little value [unless it has resources/minerals or water or good soil for farming]... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 7/21/2010 Posts: 249 Location: nairobi
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VERY TRUE, Land always appreciates, and more so with the same rate with the performance of economy of a country. The PEV slowed down the economy but not the value of land, especially in urban and municipalities.It is the best long-term investment tool, but for liquidity, its also cool to diversify. remember that rentals or mortgage are still on land, only that it has been developed and can earn monthly incomes from rentals, etc... .......and for those who would wish to invest, for now ,especially along Eastern bypass nairobi, kitengela or thika(ngoigwa)we have affordable clean plots with title deeds. at least between 500k and 1m. size btwn 40x80 and 1/8th acre. then you will be bear the witness that the only direction the value of land knows is NORTH!!!!!! for more info on the the said ..! property.....nafmuma@yahoo.com...merry xmass! ..desire to succeed is always fighting with fear of failure..
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Rank: Veteran Joined: 7/24/2008 Posts: 781
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who has tracked land prices since 1964?? this could be very useful data....land has always gone up???? think japan..limited land,big population,big industries..worsT ever property bubble...class A properties are selling at less than 1% than they did in 1989!!!! moscow bubble burst...do you know how much tatu city renaissance capital lost(around 90% price collapse)...london,autralia,spain etc shiller case index shows land price correspond with GDP growth...but it reaches a point where there is a disconnect and a bubble lasting many years is formed... The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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Rank: Elder Joined: 5/30/2009 Posts: 1,390
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VituVingiSana wrote:In Kenya, land prices have fallen during moments of crisis e.g. 1982 or 2008...
Fraud remains a huge problem. We have seem how Land Buying Companies scam poor Kenyans. We have fake Title Deeds. Land can be 'grabbed' by politicians.
The increase in Land prices cannot continue much faster than the economic growth for very long... The overall economy has to grow. Land by itself has little value [unless it has resources/minerals or water or good soil for farming]... Land is far much safer than stocks.When there's political uncertainty land will go down and so will stocks.But stocks react even to rumors! There is fraud even in stocks market.Your broker could also collapse Nyaga style What a wicked man I am!The things I want to do,I don't do.The things I don't want to do I find myself doing
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Rank: Elder Joined: 5/30/2009 Posts: 1,390
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VituVingiSana wrote:The increase in Land prices cannot continue much faster than the economic growth for very long... The overall economy has to grow. Land by itself has little value [unless it has resources/minerals or water or good soil for farming]... This is NOT true.The value of land is not just in its resources but also in the parcel's environment.e.g are there prospects for growth in the vicinity? What a wicked man I am!The things I want to do,I don't do.The things I don't want to do I find myself doing
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Rank: Member Joined: 8/17/2010 Posts: 116
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keep your investment in different basket. Invest in land, property & also in stock market. Whenever you are in financial problem for short time you can sell your stock & get money within a week. you cannot get quick money in land or property. instead of keeping money with bank, i prefer to invest in stock.
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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Esteemed Wazua members, I believe most of us are deviating from the subject matter. This is purely a property thread NOT stocks thread.My arguement is as follows :- In property investment specifically on land acquisition your best returns is to develop your land hold it for a moment and sale later (if you so wish) RATHER Than selling your plot (without developmenting) when the price shoots up. BECAUSE A developed plot will give you far more multiple gains (ex cost of building) than just to sale a bare plot. Feed backs / reactions from real estate gurus in this forum from their experience(s) will be very much appreciated. Best Regards The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@young, I hear you but alot of temptation to compare these asset classes.
It may be important to differentiate between:
Speculation: chief motive is selling for a profit
Investment: chief motive being safety of principal and income
So in both cases you've stated, we are dealing with Speculators. An investor, you see is not bothered much by selling.
So a tactful speculator could pick out a well-located plot, scarce in its attributes. There being no need to develop, a high profit would be attained. On the other hand a developer would pick an average piece of land in a housing area, and proceed to build houses as a means to increase eventual sale value.
I say the greater profit goes to the more skilled of the two, not necessarily the one who develops.
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Rank: Member Joined: 3/17/2008 Posts: 567 Location: Nairobi
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Most people are just lazy. Buy land subdivide sell. That is completely suboptimal.
Say you purchase a 3 or 5 acre piece, subdivide into quarters and sell. Possibility is that you can make 100% after 2 years. However if you put up something e.g a normal 3br hse your total return could be 200% or more after 3 years.
I am in a group of some like minded individuals and the projections on development are phenomenal, just that it has much more work to do (financing, construction etc).
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Rank: Elder Joined: 8/10/2010 Posts: 2,264
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VituVingiSana wrote:
In Kenya, land prices have fallen during moments of crisis e.g. 1982 or 2008]...
i totally disagree with you on this one. land prices have never fallen in kenya no matter the the crisis we are in.the price normally remains constant or shows minimal gainsi consider land as a fixed deposit account with about 10% to 30% interest per annum. in some special cases 50% to 100% interest in the same period. Politics is just things to keep the people divided and foolish and put your trust in men and none of them can do nothing for you...
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Rank: Member Joined: 3/17/2008 Posts: 567 Location: Nairobi
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Actually prices in some of the more politically calm areas shot up due to the influx of people relocating from the 'hot' areas. I know a place in Embu where land went from about 70k an acre in early 2008 to about 200k in late 2008.
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