Property prices in some areas of Kenya are said to have been driven up over the past few years by investment money coming from Somalia. Some of the money is thought to be the proceeds of piracy and drug trafficking in Somalia, and war profiteering in the Democratic Republic of Congo, Burundi and Somalia, so that Kenya has unwittingly become a hub through which international criminal syndicates operate schemes to launder money derived from a range of illicit activities.
Remittances sent home by Kenyans living abroad have also been invested in the local property market, contributing to steep rises in property values. In some areas near Nairobi, property prices have tripled over the past few years. A number of Somali nationals are said to have been buying properties in prime areas of Nairobi and Mombasa, and building on those properties apartments and budget hotels.
However, the global financial crisis has reduced the flow of remittances over the past few months from Kenyans living abroad, and it is thought that this may lead to stagnation in the property market. In the past six years banks have financed the purchase of around 500,000 houses in Kenya, and there is thought to be a significant risk that up to half of these houses might end up facing repossession.