Thousands of investors in Kiambu and neighbouring counties are holding worthless sale agreements as greedy land firms mint millions of shillings, leaving them grappling with loans.
The fraudulent land sellers use any means to hoodwink their victims; the Bible, sweet words, online influencers or popular presenters on vernacular radio and TV stations.
Read: Banda Homes joins Cytonn and Home Afrika in fight for survival
Kiambu is a rich county and demand for land and housing is very high, given its proximity to Nairobi.
Aware of the insatiable thirst for land, rogue real estate dealers have set up double companies to capitalise on buyers not keen to double-check on parcels they set out to buy.
They pay eagerly, only to realise that they have been defrauded.
The con game is simple. A company identifies a prime and vast land that was originally acquired many years ago and is mainly managed by a second or a third-generation owner.
The company tricks the owners or shareholders that it will buy the piece for tens, hundreds of millions or even billions of shillings, provided they ink a deal that allows it to market it as its own.
Buoyed by the seemingly lucrative deal, the original landowners fail to consider opening an escrow account where the buyer and the land-selling company are signatories to the sale proceeds. Instead, the land marketing company is paid directly by buyers but never remits the money to the legitimate owners.
Read: Agony of investors as Thika houses stall for six years gobbling millions
That is the situation hundreds of investors with Lesedi Developers Ltd – a land-selling and housing company based in Kiambu – have found themselves in after a landowner demolished a buyer’s house.
The buyer paid Lesedi in full but the cash was never remitted to the original owner in Juja.
Thika Director of Criminal Investigations (DCI) chief Joseph Thuvi declined to comment on the status of investigations on Lesedi Developers yesterday, referring this writer to Thika OCPD Daniel Kinyua instead.
Mr Kinyua referred the Sunday Nation to DCI headquarters on Kiambu Road.
Some of the many companies that have folded with investors’ money without delivering on the land and houses promised and have cases at Kiambu law courts or Thika Land and Environment Court are Banda Homes, Dinara Developers, Lettas Developers, Tehillah Holdings and E-Farm Housing Cooperative Society.
Even as this happens, many other real estate companies still in operation have not delivered on contracted projects or have been taken to court by their investors who are pushing for refund of their cash or completion of projects.
Read: Buyers beware: Pitfalls of off-plan housing schemes
They include Gakuyo Real Estate, Lesedi Developers, Urithi Housing Co-op, Kamuthi Housing Co-op, Suraya and Cytonn.
Ms Fidelis Njeri Thuku, a mother of a disabled child, had hoped to stop paying rent before the end of 2021. She secured a loan to accomplish her dream of owning a house.
Ms Thuku signed a contractual agreement with Lesedi Developers Ltd in which the company was to build her a two-bedroom bungalow at Jacaranda Ridge estate.
She paid Sh1.8 million but the company has not honoured its promise.
Seeking a refund, Lesedi Developers Ltd has been writing her bad cheques.
“The company has reimbursed zero cents to me. I have had problems repaying the loan and meeting my daily obligations. It is terrible that Lesedi Developers continues to keep me waiting. I need my money now,” Ms Thuku said.
The Lesedi Developers story, first reported by the Daily Nation on Wednesday, unmasked Mr Geoffrey Kiragu who is the founder and MD of the company.
Mr Kiragu has since registered another land selling company – Tunza Realtors Ltd – selling the same plots that Lesedi Developers is selling in Juja, Nakuru and Nanyuki.
He told the Sunday Nation last month that he sees no problem with that, calling it business diversification.
“The matter between Lesedi Developers Ltd and its investors should not be associated with Tunza Realtors, which I own with another investor. On Lesedi, we understand there are challenges with the people who sold land to us and hope the issue will be resolved soon,” Mr Kiragu said when we contacted him to comment on reports that he defrauded buyers close to Sh1 billion.
“I agree we have sold land valued at almost Sh1 billion. We are sorry for the confusion to the investors. We will deliver with time.”
To grasp the menace, you have to understand off-plan construction where many Kenyans have lost billions of shillings hoping for serene and rent-free living.
Banda Homes was one of the pioneers of the model.
Banda Homes, whose owner Andrew Kamau says is insolvent, went under with nearly Sh4 billion of its clients.
Mr Kamau says he had good intentions but Banda co-founders and directors sabotaged him and established own housing projects just next to his investment on Kenyatta Road, Juja.
“Banda Homes directors and co-founders ruined a noble idea. You have been covering these things and know who they are in the market. Most of them passed through Banda Homes and other companies we founded,” Mr Kamau told the Sunday Nation in Kiambu town on Wednesday.
We could not, however, verify his claims. Former founders of Banda Homes maintain that they had no role in its collapse.
But before Banda Homes, Mr Kamau had Dinara Developers Ltd – a company he founded with Mr Francis Wachira, who left to form the collapsed Tehilla Holdings Ltd.
Dinara Developers collapsed and Mr Kamau would establish Mashariki Developers Ltd with Mr Patrick Muchoki, Mr Paul Nderitu and Mr Martin Mwangi.
Mr Mwangi left to form Belasi Developers Ltd, which too went under.
Mashariki Developers had only one project in Kiambu and Mr Andrew Kamau would later team up with Mr Muchoki, Mr Joseph Ruhiu and Mr Paul Nderitu to form Lettas Developers that died almost immediately.
Mr Patrick Muchoki and Mr Ruhiu would later leave to form Mahiga Homes while the Nderitu brothers – Paul and Joseph – set up Nyumbani Concepts Ltd.
Mr Kamau’s chief accountant George Mburu, who worked for his companies – Lettas Developers and Banda Homes – would leave to form Mizizi Africa Homes.
Other directors of Mahiga Homes left Mashariki and Lettas Developers, which run concurrently, with former salesman Ejidio Kinyajui leaving to launch Kiambu-based Willstone Homes.
Paul Nderitu would later leave Banda Homes with sales manager Martin Njoroge, Milka Wambui and Caroline Loontubu. Mr Njoroge and Ms Wambui would form Miliki Space Ltd, while Loontubu formed Petmall Shelters.
Banda Homes and Lettas Developers CEO Fabian Nzivo would later leave and is currently a non-executive director at one of the biggest off-plan companies on Kenyatta Road.
The evolution of these companies and the exit of directors and their founders to form their own firms reveal how lucrative the sector was and still is.
There is easy money to be made as demand for housing remains high and land being scarce.
The success of these companies by then inspired many land selling agencies, among them Kamuthi Housing Cooperative Society led by its chairman Bernard Maina.
One of the projects Kamuthi Housing Co-operative Society marketed was Buffalo Hills Golf and Leisure Village in Thika, Kiambu. The marketing was based on a creative concept of a golf course and club house set on a quarter acre going for Sh5 million.
Most investors bought the idea, only to eventually lose millions of shillings with no construction on sight.
Mr Maina never responded to the Sunday Nation’s calls on when the investors will recover their money in the collapsed project.
The dream of Kamuthi Housing Cooperative Society by Mr Maina would inspire his blood brother Samuel Maina to start Urithi Housing Cooperative Society that is struggling with refunds to its members for some non-existent projects that it sold to its customers in Juja, Nakuru and the Coast.
Two years ago, a local bank secured a court order to auction the 104-acre property dubbed Panorama Gardens after Urithi defaulted on a nearly Sh1 billion loan borrowed to finance the project.
To date, some members have neither recovered their money on the project nor received title deeds.
Mr Maina did not respond to our calls on when most of the investors who bought the land with his company will get refunds.
Liquidation of investment projects
Inspired by Urithi, during its heyday, its former marketing manager Wallace Mwaura established E-Farm Housing Cooperative Society along Ojijo Road, Nairobi, that would eventually go under with millions of investors’ money.
Former Urithi Housing Cooperative Society chief executive officer Kelvin Muthuri told Sunday Nation last week that he is now an associate pastor at Deliverance Church Juja, Kiambu, after the venture folded up.
Less than two weeks ago, a High Court sitting in Nairobi allowed the liquidation of investment projects owned by Cytonn Real Estate to recover more than Sh14 billion the firm owes to its investors who have been fighting for their refunds in court.
Gakuyo Real Estate has also been facing similar cases of refund claims after not delivering on its promise of affordable housing.
Four years ago, Superior Homes was entangled in a row with the Water Management Authority after the state claimed that one of their real estate projects dubbed ‘Green Park’ in Machakos County was built on riparian land.
The picture is only just emerging, but the trends so far point to a tragi-comedy about Kenya’s hilly real estate scene where vicious sharks roam and clueless victims buy into their ideas at face value, not knowing they will be mercilessly devoured.
Once they are done devouring in one place, they sanitise their names and return to the market in another form, being more emboldened sharks in the inside.
source Nation Newspapers