Bartamaha (Nairobi):- “The fact that they are foreign, Kenyan sellers assume they have a lot of money and would ask high prices to capitalize on their desperation.” Says a real estate agent in Nairobi.
By Claire Wachira
In the last two years, the world has been treated to the daring exploits of the Somali pirates as they preyed on shipping vessels off Somali coast.
The average ransom is also up, from $1 million per vessel a year ago to about $2 million today.
Considering that Somalia is a lawless country without a cohesive government, the money can be safely stashed in various hideouts across the country without any questions, but the allure to venture out has created a number of “briefcase” investors who are willing to invest their loot in places where they can see their money grow.
Three fold
In Kenya, the government has launched investigation into soaring property prices in the country. It is claimed that Somali pirates are behind the unusual real estate boom which has seen prices increase three fold in the last five years. Something the experts say would normally take 10 years for the property values to double.
A real estate agent who spoke only on condition she wasn’t identified says; “The property market price in Nairobi is highly influenced by mismatch between supply and demand in the various market and this drives the prices upwards. The Somalis pay a higher price than the locals because of desperation to purchase specific property.”
Real land rates have increased by as much as 300% in the last two years alone.
A house that cost $20,000 a few years ago now costs four times that amount.
Money laundering
A report from the US State Department’s Bureau of International Narcotics and Law Enforcement Affairs reveals that Kenya is a fertile money laundering destination, due to its weak laws and overstretched law enforcement agencies. This is in spite of a new anti-money laundering law that was recently passed by the Kenyan Parliament.
The Kenyan Government has been quick to admit that there could be possibilities that the proceeds from piracy could have entered the Kenyan economy and could be behind the distortion of the property market in the country.
Speaking at a press briefing, Government spokesman Dr Alfred Mutua said: ‘Yes, it’s possible that some of the more than $80 million believed to have been paid out in ransom to the Somali pirates in the past one year could be laundered through property purchase and development in several countries, including Kenya.
According to Dr Mutua, Kenya offers an attractive investment option for the Somali pirates. This is mainly because of the more than 500-mile (804km) border it shares with the lawless state. As well as the already large Somali community that is resident in Kenya, believed to be over 300,000. And then there are some 250,000 refugees at the Daadab refugee camp in North Eastern Kenya, close to the Kenya-Somali border.
The 2009 U.S. Department of State (DoS) stated that in Kenya $100 million are laundered every year.
Religious
According to Hassan Guled, the chairman of the Somali business community in Nairobi, Somalis living in Kenya have acquired property by pulling resources together and borrowing from banks.
‘Somalis here also depend on money sent by a large Somali population in Europe and America who cannot invest in those economies because of religious beliefs,’ Guled said.
The bottom line is, the presence of Somalis in Kenya has caused a massive distortion of the property market. So much so that it is becoming increasingly difficult for middle income families in Kenya to buy a decent house.
Whether this is the pirates way of seeking an early retirement from piracy and hoping to settle down in a safe and secure location such Kenyans remains unknown
———–
Source:-Radio Netherlands

Comments

comments