Variations in Land Delivery Costs as a Factor in Land Speculation in Metr opolitan Nairobi: A case study of Eastlands, Nairobi, and the bordering areas of Machakos and Kajiado counties

Abstract

The urban rural duality in the land administration policy in Kenya tends to create two land use development control models and, further, such policy results in two separate land transaction costs. In a situation where land values in the two locations may not vary significantly, such a variation in land transaction costs would lead to land speculation in the less costly zone. It is postulated in this paper that there would be no significant variations inland sale value/ land purchase price in the areas of Eastlands within the city of Nairobi and areas immediately outside the city fringe. As a result, a land speculator would be indifferent between the areas within the city and areas outside the city because the two zones shall generate the same profit levels. However, the variations in land delivery costs in the two zones would impel the land speculator to opt for areas outside the city where he/she shall maximize profits. To test the postulation advanced in this paper, the average land values in some sampled areas of Eastlands and other areas sampled from the peri-urban zones were compared using the test static. Secondly,the average land values in the two zones were also tabulated and compared using the test. Thirdly, the average land transaction costs in the two areas were compared using the test. The inquiry establishes that the duality in land use management in Kenya, began during colonial rule and continued to post colonial era, has resulted into a more expensive urban land registration and delivery model in Nairobi and a less expensive rural land registration and delivery model outside the city. Yet, the investigation did not establish any significant variations in land values between East Lands and the areas sampled in Machakos and Kajiado. Consequently, the hiatus in land delivery cost in the two zones has created an opportunity for land speculation in areas immediately outside the city fringe.This then was found to be the cause of accelerated urban sprawl.