Watched JM yesterday on money matters and i realised that they already have a strategy to infiltrate the mortgage market. These guys have created an axis of HFCK (the mortgage provider), Equity bank (the fundraiser) & Britak (the developer). Looking in closely Equity is a majority shareholder of HF while JM & Peter Munga(read equity) are large shareholders at Britak. According to Britak's MD the IPO is not for cashing out but rather to develop & grow their businesses & that they are looking at growing their 'real estate development business.' With this new axis, a burst is imminent.

@Papa,

The property may actually be very well priced. You see, it is not the house that is for sale but the potential of what you can make of it. If you buy the property ( i.e land in location) what can you do with it? if you put up a six storey flat with shops in the ground floor, you should recoup your money in the next seven years max. So it depends on how you look at it but it is definetely not a place to buy and live in.

@stocksguru7 stop hating on capitalism... As long as demand for housing continues to rise and there is limited supply prices will go even higher than they are now...

We will be all paying 120k installments and 60k rent for those apartments your talking about and hamtasema chochote...

Clearly there is a lot of misinformation on this topic. I totally agree that the price of property is ridiculous but I disagree there is a bubble.
The factors driving up the prices of property are many. Urbanization is the main contributing factor. With every one moving to towns the need for housing grows with the population increase. The growth of towns is not linear and housing can only grow in a linear fashion which is way below the population growth.
Youth bulge falls under the urbanization umbrella and they require housing and amenities. The youth bulge also come with able bodies persons who can contribute labour and brains to grow the economies that will support their consumerism mentality.

Kenya is currently in a situation where demand is high, a youth bulge that might finally create a significant middle class and is able (maybe not capable) to generate wealth. This is only the growth spurt.
Is there a correction in the offing. Maybe but the correction is small and might only happen in the executive range apartment houses(>10 milli) and poorly serviced and highly priced area. Middle class and low income housing WILL NOT HAVE A CORRECTION!

There are too many opportunities in the property sector and if Nairobi is too rich for you look at other towns because this is happening in Nairobi and all other towns albeit in a smaller scale.

buying for renting gives pathetic rental yeild....however buying for capital gains of middle level housing with rents helping manage the mortgage payments still make economic / cashflow sense...