MARKETING AFRICA MAL 18/17 mal 18:17 online - Page 36

THE REAL ESTATE OFF PLAN INVESTMENTS IN REAL ESTATE By Nancy Murule O ver the last couple of months, we have witnessed a number of property buyers coming to the fore claiming to have been swindled by developers over off plan real estate purchases. Specifically, the Simple Homes and Gakuyo Real Estate debacle! The Simple Homes Case Formed in October 2015, it started operating as a developer claiming to sell houses off plan via a tenant purchase scheme, in which buyers were first required to join their cooperative and pay a Kshs 2,000 admission fee, then pay a 25% deposit for the houses in various locations including Syokimau and Kitengela. After this, they would be paying monthly installments equivalent to their current rental rates which could be as low as Kshs 24,000 per month. The prices of the houses were fixed and no interest was charged. The buyers were to assume occupancy immediately after completion and could pay off the 75% from 5-40 years. ‘‘ Off plan investment refers to the purchase of property before completion, generally driven by the high price of real estate and the long time taken to deliver units. The buyer hence buys the property off the plan or design stage in the development. It has become increasingly popular as the prices of the property sold are much lower than market rates, and can be up to 50% less than the price of a completed house.’’ 34 MAL 18/17 ISSUE They however did not take members to site, were not registered by any of the developer bodies, and when clients inquired on progress and requested site visits, they shut down operations as well as the online activities, which was in February 2017. Local dailies have reported that at least Kshs 500m have been lost by investors and homebuyers in the scheme. The Directorate of Criminal Investigation has since then started investigating the matter. The Gakuyo Real Estate/Ekeza Sacco Story Gakuyo Real Estate/Ekeza Sacco is alleged to have collected in excess of Kshs 100m from about 7,000 clients in deposits with each paying Kshs 10,000 with the total sum inclusive of subsequent installments being in excess of Kshs 3b. The deposits are supposed to accumulate to quantities large enough to purchase either houses or serviced plots in various parts on the country including Embu and Nanyuki. The company was supposed to deliver the first batch of houses in 2016 but they have not been delivered with