The effects of the Covid-19 pandemic on the economy continue to be felt across all sectors with hundreds of Kenyans facing an unprecedented future.
A majority of them, have fallen short of income with most businesses reporting a dip, a situation that has led to many falling into debt.
The local newspapers are once again filled with hundreds of commercial property, homes, houses and parcels of land set for auction after owners failed to meet their financial obligations.
Most of the houses valued to the tunes of millions of shillings are set to be sold at throwaway prices as the auctioneers indicated that sales are subject to reserve prices.
A reserve price is a minimum price that a seller would be willing to accept from a buyer. Auctioneers are not typically required to disclose the reserve price to potential buyers. If the reserve price is not met, the seller is not required to sell the item, even to the highest bidder.
In the dailies, auctioneers indicated that they reserve the right to reject any bid without giving any reasons whatsoever.
The houses targeted range from mansionettes, villas to gated communities located in prime locations in Nairobi, Mombasa, Machakos, Kiambu, Kisumu and other regions such as Migori, Nyamira, Kajiado, Kitui, Siaya, Bungoma and Nyandarua counties.
In Nairobi, a vacant residential property situated in the uptown Kigwaru Estate near Runda is up for grabs. No structural improvements have ever been erected on the land. This shows that the buyer is losing prime property before putting it under any development.
In Mombasa, two pieces of land fully developed with a six-storey commercial block in Mtwapa, Kilifi County are also listed for auction. The houses entail several two bedrooms fully furnished apartments with water, electricity and all basic amenities.
In Machakos, one house in Gables Park Estate along Katani Road, Syokimau which earns monthly rent of Ksh80,440 is on auction. A three-bedroom maisonette in Pine City Estate was also listed.
In Kiambu, an entire estate situated off Kiambu Road and has a villa, a three-bedroom house and domestic staff quarters, has been put up for sale.
A rental block still under construction in Kisumu whose accommodation comprises identical two-bedroom units in each of the ground and first floors within Coptic area, Kisumu Municipality has also been listed for auction.
Some of the parcels of land in all the regions measure up to 10 hectares. Interested bidders were urged to deposit from Ksh50,000 to Ksh1,000,000 in bankers cheques to be allowed to bid.
“25 per cent of the purchase price must be paid on the fall of the hammer or close of business of auction day, failure to which the auction deposit will be forfeited."
“Balance to be paid in either 60 or 90 days,” the notices by auctioneers; Keysian Auctioneers, Phillips International Auctioneers and Garam Investments read.
Kenya’s mortgage market has been growing though. Housing loans have risen more than ten-fold since 2006, from 1,278 loans valued at Ksh19m to 24,458 loans valued at Ksh203.3bn in recent years, according to the Central Bank of Kenya (CBK).
However, defaults on mortgages jumped 48 per cent to Ksh70.5 billion in the year to March 2021 owing to harsh living conditions and the Covid-19 pandemic.
Unpaid mortgages increased by Ksh9.1 billion or 14.8 per cent in the three months to March 2021. Banks that had by then slowed down on seizures heightened debt recovery to thus the spike in auctions.
The auctions are meant to cushion the banks from loans as the latest data from the Central Bank of Kenya (CBK) banking sector supervision report indicates that the 14 microfinance banks recorded a 561 per cent growth in losses - from Ksh339 million in 2019 to Ksh2.2 billion as of December 2020.
“Microfinance banks were vulnerable to Covid-19 pandemic, which disrupted Small and Medium Enterprises (SMEs) and households, their niche markets."
“Total net assets declined by 1.5 per cent to Ksh75.1 billion in December 2020, mainly coming from loans and advances,” CBK disclosed.
