Why Off‑Plan Schemes Still Reign Supreme in Kenya’s Property Market

• Understanding Off-Plan Schemes: A Path to Homeownership

• Why Off-Plan Schemes Are Popular with Property Developers

• A Deeper Look: Do Buyers Truly Benefit from Off-Plan Schemes?

• The Appeal of Off-Plan Schemes for Homebuyers and Investors

• My Take: Why the Risks of Off-Plan Schemes Often Outweigh the Benefits for Retail Buyers

• Unpopular Opinion: Off-Plan Schemes? Go with the Chinese

• Navigating the Risks: What Buyers Should Know

• Final Thoughts: Can Off-Plan Schemes Still Be Trusted?

Off-plan Schemes: A Developer’s Favourite Tune

Off-plan schemes are to property developers what music is to the soul! If you put any number of developers in a room to discuss off-plan real estate schemes, the consensus will be that they are the next best thing to sliced bread. And homebuyers and property investors are bound to concur.

Understanding Off-plan Schemes

Off-plan schemes are typically arrangements in which a property buyer or investor contracts a developer for the acquisition of a property that has yet to be constructed.

The buyer begins payment before and during construction, with the expectation that by the time construction is completed, the full purchase price will have been settled.

These schemes are often used for residential or commercial developments—estates, gated communities, or apartment blocks—where the properties are sold in phases.

Early adopters are rewarded with lower prices than later buyers, essentially receiving a discount for taking on the perceived higher risk of investing in a conceptual project.

Why Developers Love Off-plan Schemes

For developers, off-plan schemes are more than just a financing method—they’re a strategic play. They enable developers to demonstrate market interest to financiers and use buyer deposits to prove the project’s viability.

With enough buyers on board early, the project becomes “bankable.”

Executed well, an off-plan acquisition can yield immediate equity for the buyer on handover, higher than if the buyer had purchased at completion. But the success hinges entirely on the developer’s ability to deliver both quality and timeliness.

The Hidden Risks in Off-plan Schemes

While the upside appears enticing, buyers need to understand that off-plan schemes are essentially just unregulated financial tools that give developers access to cost-free, risk-free capital.

• Unregulated: Developers aren’t required to float conventional financial instruments or comply with oversight that other capital-raising sectors are required to meet.

• Cost-free: Deposits made by buyers are interest-free and the “discounts” are defined by the developer—not the market. When the project experiences an overrun on delivery, for example, the homebuyer will still have to finance their accommodation elsewhere.

• Risk-free (to the developer): All financial risk rests with the buyer or lender, giving developers maximum upside with minimal exposure.

While developers argue that buyers earn their reward through discounts and equity, it is more accurate to say that the buyer is rewarded by the market, not the developer. The market acknowledges the buyer’s risk with capital gains, not the developer’s goodwill.

So, Why are Off-plan Schemes so Popular with Buyers

Off-plan schemes are also incredibly appealing to homebuyers and small-scale investors, especially those in the informal sector who struggle to qualify for mortgages. Compared to mortgage financing, off-plan schemes offer:

• Flexible payment terms (bulk payments over time)

• Easier access for self-employed individuals

• Lower entry prices for early adopters

The alternative—mortgages—remains a complex, mistrusted option, plagued by high interest rates and tedious approval processes.

For many, off-plan is simply the more achievable route to homeownership.

My Take: Who Really Benefits?

Where the Real Power Lies

Despite their popularity, the reality is that retail buyers often shoulder the greatest risk in off-plan schemes. While these schemes appear inclusive, the true benefits accrue to wholesale buyers—institutional investors or high-net-worth individuals—who can negotiate for:

• Better pricing (due to volume discounts)

• Customised payment terms

• Influence over project timelines and design elements

These buyers possess leverage. Retail buyers, by contrast, sign standardised contracts with limited negotiation room and little recourse if things go wrong.

In my view, developers benefit the most, followed by bulk buyers. Retail buyers are often enticed by the dream of early equity but bear the brunt of execution risk.

Unpopular Opinion: Go With the Chinese

This may be a controversial opinion, but I must confess a bias towards non-indigenous developers, particularly Chinese firms.

On average, these developers have demonstrated exceptional project management discipline. In my observation, they tend to:

• Deliver within the promised timeline
• Offer more flexible terms with the ability to customize payment plans
• Stay within budget
• Maintain better structural and architectural standards

I am in no way suggesting that all local developers are incapable or that all Chinese firms are perfect. But my observation is that these firms have “cracked a nut” and are far more reliable for the enterprise of off-plan schemes, with a history of timely completions in comparisson to local firms.

Read into this what you will.

That said, buyers must always conduct their due diligence, irrespective of the developer’s origin.

Conclusion: Proceed with Caution, Not Fear

Despite their flaws, off-plan schemes are here to stay. They fill a vital gap in Kenya’s property market, especially for buyers locked out of traditional financing. But they require caution.

Before entering into any off-plan agreement:

• Research the developer’s track record
• Consult professionals (lawyers, architects, quantity surveyors)
• Cross-check the reputation of the developer from their professional associations and the reputations of their leadership, in particular any past directorships in other property development firms.

Regulation needs to catch up with the realities of off-plan financing. Until then, buyers must bear the burden of risk. But with insight and prudence, off-plan schemes can still be a viable path to homeownership, just not one to be walked blindly.