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Last Updated:[04-01-2010 02:18:36 EDT] Zoom in Zoom out Back to Tradenews

Somali Piracy Ransoms Alleged on Kenyan Realty Boom

tradenews A sudden surge in property prices in Nairobi, the Kenyan capital, has invited the wrath of general public alleging the piracy booty from Somalia is meddling with the realty market to make them beyond the reach of common man. The recent protest has called for a thorough investigation by the government to unearth the source of property deals which has triggered the rise of property prices beyond imagination while rest of the world saw slide in related market.

A government spokesman Alfred Mutua told the Associated Press (AP) that there was suspicion that a portion of the ransom monies has been used in the purchase of property in several countries including Kenya. He added Kenya might be the most attractive spot for pirates to launder their money because it shared roughly 500-mile (800km) border with Somalia, and had investment opportunities with a large Somali community of up to 200,000 people.

It has been observed that the neighborhood town of Nairobi which now called as "Little Mogadishu" because of its Somali community had witnessed sudden rise of large business and apartment buildings in a short span of time. Even suburbs of Nairobi has seen explosive growth in property prices, for instance, homes in Karen which were sold for $200,000 five years ago sells for $500,000 today.

Roger Middleton, a piracy expert at the London-based think tank Chatham House said Somali pirates had been paid more than $100mn in ransoms the last two years. The average ransom is also up, from $1mn per vessel a year ago to about $2mn today. The latest reports of the hijack of four vessels this week alone and rise in ransom money are only expected to worsen the situation if Kenyan government does not take stringent measures to counter the alleged ransom money in property transactions.

According to AP, one pirate by name Osman Afrah said he bought three trucks that transport goods across East Africa. Likewise, another by name Abdulle admitted that through his brother in Nairobi he had made investments there, and owned a huge shop that sold clothes and general merchandise in a bid to quit piracy. He also said Pirates had stashed money not only in Nairobi but also other places like Dubai, Djibouti and others.

On the contrary, the Somali community had rejected the allegation, and said that they would take legal option to stop any investigation into piracy ransom circulation. Hassan Guled, the chairman of the Somali business community claimed they had acquired property largely through banks and remittances from a large Somali diaspora in Europe and America who could not invest in those economies because of religious beliefs.

However, Pius Khaoya, a real estate agent said factors outside the economy were influencing property prices, and it did not tally with the performance of the country's economy. He further added under normal circumstances in Kenya, it would take a decade for property values to double, but that real estate prices had tripled in the last five years.

By Jose Roy

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