Auctioneers feel the pain of market without buyers

Along the white sandy beaches of Nyali, Mombasa, tall palm trees wave behind a beautiful Sh6 billion resort. Scenic as it may be, it has been on sale for the last three years. The owners of the hotel have yet to find a buyer. Despite their intense efforts to go after even international investors, no buyer has shown interest in snapping up this gem that overlooks the Indian Ocean. Now, out of desperation, they are willing to take half what they wanted – they will settle for Sh3 billion. The owners of the hotel are not alone. If anything, they are perhaps better off than many other owners of property that is in distress who cannot get buyers, even at cut prices. In an even worse position are banks that have repossessed properties from defaulting clients and put them up for auction, but these are largely unsuccessful. The auctioneer’s hammer will not fall. An analysis by Home & Away has revealed that of the hundreds of properties on auction – on the back of a slowing economy – only a handful have found buyers. The most affected are high-end properties. Together, auctioneers have tried to dispose of houses – both residential and commercial – whose value could be running into billions of shillings. In the month of January alone, one of the largest auctioneers put up for sale property worth Sh5 billion. Among the houses that stand out and have been put up for auction in the recent past include a section of Nextgen Mall along Mombasa Road, the Nairobi Upper Hill Hotel and a three-bedroom villa at the prestigious Great Rift Valley Lodge where a unit can go for Sh50 million. Others are Thika Business Centre (whose anchor tenant is Naivas Supermarket) estimated to be worth Sh540 million, and a penthouse at The Mirage in Westlands that can fetch Sh48 million under normal circumstances. Industry players, however, say just about 10 per cent of the properties on auction are finding buyers. There are instances where the auctioneers have not found anyone willing to bid above the reserve price. Basically put, there is no shortage of houses that buyers can get for a bargain. This has seen phrases like ‘buyer’s market’ thrown around, yet many of the distressed owners are unable to offload their assets. Garam Investments Managing Director Joseph Gikonyo, whose firm is auctioning properties worth billions of […]

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