LAND INVESTMENT IN KENYA

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  • Buy land through reputable institutions.
  • Fraudsters abound in the land business.
  •  Investors prefer putting up rental apartments.

 

How To Make The Right Decision

Land investment in Kenya has grown in leaps and bounds. There are many opportunities as a land investor in Kenya, with the country set to see more and more demand for land by developers, housing cooperatives, housing estates and other real estate investors. But whether you plan to invest in land as an individual or part of a real estate group, there are several factors that you need to consider before making the final decision.

 

investment illustration
An investment illustration courtesy of Remax

The right land investment opportunity will be profitable and cost-effective — something that is not always obvious. Investing in land as an asset can be lucrative, but it does have its risks. This article explores some of the things you should keep in mind if you’re considering becoming a land investor in Kenya.

How to Identify a Good Land Investment Opportunity in Kenya

Land investors need to be very careful when it comes to identifying the right investment opportunity. But how do you know if a particular piece of land is worth investing in? There are several key factors you need to keep in mind: –

Zoning: The first thing to look for is zoning, especially if you’re planning to build a residential development. You need to find out whether the land is zoned for residential use and whether it meets the requirements for future developments. –

Location: The location of the land is also very important, as it will affect the demand for the development and how much you can sell it for. Areas that are close to towns and cities are generally more desirable than those that are more remote. –

Price: The price of the land is also very important, particularly if you plan to use it as collateral for a loan. If you buy overpriced land, you’ll be left with little room for growth. –

Context: You also need to think about the broader context in which the land sits. For example, if you have a residential property, you may want to consider the surroundings and what impact they might have on your property.

 

investment on land
Investors are putting up rental apartments on their land. Image Mortgage Mechanic

Land Zoning

One of the first things you need to do when investing in land is to check the zoning of the property. This will give you a good idea of what you can do with the land and what restrictions may be placed on it. Zoning is an essential part of the real estate process, and it’s something that you can’t ignore when you’re investing in land.

If you buy land that isn’t zoned for residential development, you’re unlikely to be able to use it. You may be able to exchange the land for a different plot, but it can be a long and complicated process.

Market Research and Due Diligence

Land investment is a long-term investment, and so you need to look at it from a long-term perspective. Before you sign a deal with a seller, you need to do some thorough market research and due diligence. This will help you to understand the factors that impact the market, such as supply and demand, as well as any upcoming legislation that could affect the market.

You can also use this research to identify particular areas of the market where you think there is an opportunity for growth. In addition to this, you also need to look at the competition. This will allow you to understand what other investors are offering and how you can differentiate yourself from the market.

Location and Infrastructure

You also need to think about the location and infrastructure of the land you plan to buy. You need to make sure that the land is close to amenities, whether they are commercial or residential. You also need to consider the transport links in the area. If the land isn’t connected to a nearby highway, railway or airport, it will be harder to sell. You also need to consider the availability of gas, water and electricity. If there isn’t adequate infrastructure in the area, it will be difficult to sell your land.

 

land and building
Building a two bedrooms bungalow. Image, Pinterest

Tax Implications of Land Investments in Kenya

One of the first things that people think about when investing in land is the tax implications. While it’s true that you can claim the land investing tax break, the amount you can claim differs from year to year. The good news is that the amount you can claim has been increasing. In the 2018/2019 tax year, you could  claim a maximum of Sh350,000. However, this amount can rise significantly, and it’s worth keeping an eye on the government’s tax breaks for investors to make sure you get the most out of your investment.

The other tax implication of investing in land is Stamp Duty. This needs to be paid on the purchase of the land and on the transfer of the land. The amount payable will depend on the government rates at the time and the value of the land.

Conclusion

There are several advantages to investing in land, such as the potential for long-term returns and a low-cost entry point. However, you also need to be aware of the risks and the need to make the right choices when choosing a site and making an investment. Land investing can be a lucrative business, but it only works if you choose the right plot of land and have the right investment strategy. Fortunately, there are several factors that you need to consider when choosing the right land investment opportunity, such as zoning, location, price and context.

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