Erdemann’s Sh7bn, 2,720-house plan stalls

A section of the 2,720-unit property being constructed by Erdemann Property Limited

A section of the 2,720-unit property being constructed by Erdemann Property Limited in a picture taken on March 23, 2023.

Photo credit: Dennis Onsongo | Nation Media Group

Real estate firm Erdemann Property Limited now says its ambitious Sh7 billion project that aimed to build 2,720 houses a walking distance from the heart of Nairobi has stalled, blaming it partly on the financial difficulties that Kenyans are facing. 

Had Kenyans taken up the project as anticipated, the firm says, it would have delivered the houses by 2021 as it had promised.

However, it notes, “the uptake of the project (has) declined due to the hard economic times”. 

But now the firm is facing difficult questions due to broken promises. Frustrated customers who signed up from as far back as four years ago are getting increasingly agitated as Erdemann pleads for patience.

The firm’s Facebook page is awash with questions about the project and at least one person has reported being blocked for asking questions. 

Erdemann, however, denies blocking anyone, saying: “The people managing our social media platform are very professional and cannot at any given time block anyone who has subscribed to our pages for submitting their honest grievances. In fact, we are looking for more followers.” 

Audacious ambitions

The project dubbed the River Estate, began in 2019 and its ambitions were audacious. Marketing material on the Erdemann website says it was “bound to change the Nairobi skyline as it will be the first project of its magnitude in East and Central Africa”. 

“It will give the residents access to the beautiful panoramic views of Nairobi city and its environs,” it adds. 

Located next to Ngara Girls, the site of the River Estate is along Jodongo Road, a 15-minute walk or a four-minute drive from the Khoja stage in Nairobi.

It is right next to the Nairobi River.

Model illustrations make it look like eight tall boxes standing next to each other.

The project has been designed to have eight blocks, each 34 floors high and holding 340 units. 

When Erdemann posted about the start of the project in July 2019, it indicated that its most expensive offering, a “type A” two-bedroomed house, would go for Sh3.9 million. But as per the current offering on its website, the most expensive two-bedroomed unit goes for Sh2.9 million. 

Among the Kenyans who paid Sh3.9 million to secure themselves a space in the building is Sarah Bonareri, a mother of one in her thirties. She saw it as a perfect investment. She was shown the plans and she chose a room labelled D0301.

One of the ways she would use it, she thought, would be to rent out, take a mortgage and repay it using her salary and the rental income. 

“If I had rented out that apartment, I would have got enough money to take out a mortgage and get a bigger house for me, my son and my siblings. Earlier that year, when my son was one month old, I’d lost my brother with whom I was staying,” she told the Sunday Nation

So, she scooped up all her savings, took a loan and asked for financial support from her retired mother to raise the Sh3.9 million. In her calculations, if the project was ready by 2021 as promised, that would have been a great investment. 

But she is now a teary and bitter woman due to what she terms being frustrated by Erdemann. She broke down several times in her interview with us, regretting the decision and ruing the losses she is incurring and the questions her mother keeps asking her.

She has called Erdemann (she claims you’ll be lucky to have your call picked), visited their offices, visited the project site twice, written emails, and basically did anything she can do to get answers. In all, she feels Erdemann is indifferent to her plight. 

“I feel like Erdemann is being insensitive and they do not care about the people who invested in their project, and they do not care to listen. When you go to the office physically, you’ll find a number of employees ... basically, we never have access to anyone who can make decisions,” she said. 

“They are ignoring the fact that we are losing money. If I had put that money in my Sacco, by now I would have earned interest of over half a million,” she added.

Denied claims

But in a response to our queries, Erdemann said it has not made communication difficult. 

“There is no way we can afford not to respond to clients who are willing or have already invested with us,” said the statement from the firm’s sales and marketing manager Michael Olanya. “As a company, we fully understand the importance of communication.” 

Mr Olanya cited the Covid-19 pandemic, and delays in getting approvals among other factors as the reasons for the stagnation. 

“We had some challenges that led to the delay of the construction, such as getting the height approval from the Kenya Civil Aviation Authority (KCAA). This is a very necessary approval considering the height of the proposed building. We got the KCAA approval in February 2020, just before the Covid-19 pandemic became a problem in the country,” he said. 

He noted that the pandemic halted the travel of experts who were to work on the project. “Our Chinese engineers (consultants) could not travel to Kenya due to the restrictions that had been put in place by the government,” said Mr Olanya 

Erdemann’s founder is Mr Zeyun Yang, a Chinese investor who has been in the real estate business in Kenya since 2003. The company is most known for the Greatwall Gardens apartments.

“Having sorted out all the challenges that we were facing, we resumed construction of The River Estate in April 2021 and the new completion date was set to December 2023,” said Mr Olanya. 

It is barely nine months to the December deadline and, when we visited the site on Thursday – where we were met by idling cranes, an abandoned site with zero construction activity going on – there was little to show that the deadline would be met. 

Mr Olanya’s response to our queries suggested that it is unlikely the project will be complete by the end of the year. “We were almost done with the construction of the two-level basement parking and foundation for most of the blocks before the project stalled again,” he said. 

“Whereas we do understand that we had made a commitment to deliver the units to our clients, we request that they accommodate the company as we work out a way forward. We halted construction to source more funds as we had utilised all that we had collected,” he added. 

“(Because) we rely on off-plan/presales to finance the construction, it has been difficult to proceed since the uptake of the project declined due to the hard economic times. We are therefore seeking financing from elsewhere to enable us to proceed with the project and also refund clients who have requested the company to pay back the monies they had invested with us.” 

Ms Bonareri wants a refund. Some of the clients have accepted to be allocated units at another Erdemann project in Athi River. Ms Bonareri doesn’t have that in her options. 

“They offered that we transfer the funds to another project, which is Greatwall Phase 5. When I was investing in the River Estate, I had the option of investing in many projects but I opted not to because it wasn’t my kind of investment,” she said. 

Mr Olanya said they are only transferring the willing clients.