Suraya- some investors think it’s a ponzi protected by the ‘people fro above’…but is it?

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Suraya was one of Kenya’s most advertised off-plan developers. Its portfolio includes about 20 housing and mixed-used properties, including Fourways Junction, whose land is currently the centre of a court case with the Gatabaki family, the Spring Valley Business Park and apartment complexes off Mombasa Road and Ngong Road.

Laurie Akinyi Akello, 44, was one of those hopeful Kenyans looking to invest in property. In 2013, she heard about Suraya. “I was in a small chama of three, and one of us had invested in their Sucasa/Encasa property,” she says. Sucasa was an apartment complex off Mombasa Road, comprising all the bells and whistles — school, soccer field, community hall and so forth. The apartments were extremely fairly priced, something all the investors the Saturday Nation spoke to pointed out as the most attractive aspect of Suraya’s sales pitch.

“I also saw a lot of adverts in the media. It was affordable housing. Everybody was talking about Suraya.” Laurie saw no reason not to invest.

She went to visit the Suraya offices in Spring Valley — back then a simple bungalow with full-scale sample show houses of the business’ four upcoming properties so potential investors could get a feel of the houses. She spoke to a sales agent and decided to pay a deposit of Sh806,000. She also received an offer letter.

“In July 2013, I gathered some of my girlfriends and decided to take a road trip,” she says. And off they went to Sucasa, which turned out to be very hard to find, deep inside Mlolongo, with a very poor access road. When they finally found it, there was no sign of construction. “I hated it,” she says. By this time, she had paid Sh1.4 million in total.

Laurie went back to the Suraya offices to negotiate a transfer to another property. Suraya had launched a project called Loneview on Mombasa Road and they were willing to swap the letter of offer to allow her to switch properties. All she had to do was top up her initial deposit payment. In May 2014, she transferred the Sh1.4 million to Loneview, then began the wait for completion.

The Loneview project was an attractive one; prices started at Sh4.6 million for a one-bedroom apartment. Besides the collection of one, two and three-bed apartments, there was the promise of a guardhouse with an intercom system, pool, children’s play area, jogging track, clubhouse and other fancy amenities.

Construction had begun well in 2013. Buyers received regular updates via email and Suraya’s website. With things looking that good, Laurie decided to invest in yet another Suraya property — this time, The Lynx on Ngong Road. The one-bedroom apartment would cost Sh4.2 million, and she decided to buy cash. So she ponied up Sh900,000 and signed a letter of offer. The completion date was set for July 2015.

Meanwhile, construction at Loneview was proceeding in fits and starts. Part of the complex was finally ready in 2016, and the owners started to move in. And that’s when the trouble started.

“Suraya did not deliver what they had promised,” Laurie says. Not only were there no street lights, but the swimming pool they promised was what Laurie alternately describes as “a pond” and “a mosquito breeding ground.” The pool was so dangerous residents fenced it off to keep children away from it.

“There was the semblance of a guardhouse, but there was no intercom system,” she says. To cap it all, there was no sewer treatment plant. Toilets would flood when used. “Suraya sent some people to do some first aid on the toilets. But it’s still a health risk,” she says.

Residents also discovered Suraya had left them with a water bill of Sh1 million. Subsequently, tenants had no water at all. Some of the homeowners had to finish their apartment on their own.

When contacted, Suraya staff would toss the residents around. “At some point it wasn’t clear who we were dealing with because the staff turnover was so high,” she adds.

By this point, Laurie was Sh2.8 million deep in Loneview and to her dismay, she had difficulty getting her lease from Suraya. “To date I have no proof of ownership,” she says. She had also paid Sh2 million in total for the Lynx apartment — only to discover that it was set to be auctioned.

“I just want my money back for the Lynx apartment, and my lease for the Loneview one,” she says.

Mr Muchiri Maina, 39, first came into contact with Suraya in 2015, via a billboard he saw for a project called The Falls on Riverside. “I was attracted to the price — Sh14.5 million for a two-bedroom apartment. It sounded like a deal.” And indeed it was, given its extremely prime location. “I should have heeded that warning about ‘when the deal is too good…’” Muchiri chuckles.

He decided to do some due diligence. “Everybody was saying nice things about Suraya. Only one quantity surveyor told me to be careful about the apartment measurements because Suraya had developed a reputation for building slightly smaller than the square feet they had promised.” Satisfied with his findings, he went off to the Suraya offices to see what the development was all about. There, he met a saleswoman called Mary, who gave him a brochure — the renderings looked fantastic. “They even had a waterfall planned inside the apartment block,” he says. There would also be a gym, lifts, a clubhouse and a pool.

Muchiri consulted with his wife Patricia and they agreed to enter the development as cash buyers. He signed the letter of offer for a two-bedroom apartment and agreed to a payment schedule that would commence with Sh1 million. He also continued to make payments in the region of Sh300,000 per tranche. Construction was due to start in November 2015 and end at the end of 2017. By the time it started to fall apart, Muchiri had invested Sh2,310,000.

In 2016, Muchiri went to see the status of the construction. “At first, all there was was a site office and some materials. Then they brought in an excavator. They dug a big hole for the foundation, then the excavator disappeared.” Muchiri went back to Mary to ask what was going on. She told him they had hit a big rock that needed to be dealt with, and their Chinese contractor didn’t have the necessary equipment. She also told him that they needed to divert the section of the Nairobi River that ran through the property. “It all sounded genuine so I kept making my payments.”

By late 2016, Muchiri realised something was very wrong. Construction had stalled completely and they would never be able to lay the foundation, build the structure and finish the apartments by the promised time. By April 2017, word was spreading that Suraya was in trouble. They had stopped updating homeowners on construction progress, and by then, Mary had left and he had been handed over to various other staff. “Staff turnover was very high there, which is never a good sign,” he says.

He reached out to Pete Muraya. “I told him I wanted my money back. He said I would regret it because the property, once built, would be high-value.”

Upon further probing, Pete added a few more confessions. “He said they had found out the Chinese contractor they had hired was fake — a briefcase operation. Then he said times were hard, the economy had affected their business. He didn’t have money for their consultants, they had not been able to get enough buyers. I felt he was lying; now it was no longer the rock and the river that were the problem.” Eventually, Pete agreed to pay him back in three tranches. “I got one cheque for Sh900,000 which, surprisingly, went through. After that, nothing.”

Muchiri tried to get the rest of his money back. The Murayas stopped talking to him, while staff would toss him back and forth among them. Muchiri would sit in the Suraya offices for hours on end, waiting for audience with Pete. “It’s sad that at some point, whenever the front-office staff would see me parking my car they would vanish.”

Sometimes Pete and Sue would walk in, see and ignore him, lock themselves up in their offices and leave again without talking to him.

“By this point they had chase cars and mean-looking bodyguards. Pete would drive in in his Range Rover Autobiography, and Sue in a Porsche Cayenne, and neither of them would talk to me.” The starting price for a Range Rover Autobiography, per Land Rover Kenya’s website, is $338,600 (Sh34.4 million).

ARBITRATOR

What Muchiri currently finds irritating is the lack of communication from Suraya — for example, regarding the news that Suraya had accessed Sh1.6 billion from four local banks to continue construction. “They are campaigning in the media but not talking to their investors. Why can’t they pick up their phones and call us?”

He is also upset about the dispute terms. “The contract says we must first go into arbitration before we can go to court in the event of a dispute. I tried to use an arbitrator but neither them nor their lawyer would turn up for sessions. We have to pay the arbitrator’s costs, plus our lawyer, even for the sessions they missed. I stopped the process because I realised I was throwing good money after bad.”

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Ms Victoria Walwa, 39, invested in two Suraya projects, starting with Loneview, in 2011. The other project she and her chama have purchased as cash buyers — Lynx Royal — is now in dispute and about to be auctioned by Keysian Auctioneers, although the homeowners have applied for an injunction against the auction.

Victoria’s journey with Suraya started when she was hired at a local media agency, when she applied for a mortgage after doing some research into viable investment options. Off-plan housing seemed like a good idea. “I had started looking at various options, but Suraya seemed the best because their prices were so good. I thought it was because they had so many projects going on and were getting bulk discounts on construction supplies, so I didn’t think the pricing was odd,” she says. Suraya also seemed to have a good reputation. “People told me (Pete and Sue) were decent folk.”

Having seen their Loneview adverts, Victoria decided to apply for a mortgage and get a two-bedroom apartment. “I got all the documents and made a down payment of Sh350,000. The completion date of the project was to be February 2013.”

In the beginning, Suraya updated investors on the status of construction. Then, as is the case with all the other projects, the updates stopped coming. “I would call the office to ask what was happening and they would say everything is on track, they are just experiencing some challenges. I decided to be patient and give them time.”

In 2014, Victoria quit her job to go into self-employment. However, she discovered that her mortgage had lapsed and she would have to reapply for it. “Since my husband had a payslip we used it to reapply. The mortgage company wanted us to update the valuation of the house and top up the payments because it had been three years since I first applied, so we did that too.”

Since then, Suraya has been running circles around her. “I hear some Loneview units are complete and have been handed over. I have not received a letter of completion,” she says. Suraya has not communicated with her despite her talking to the lawyer who processed the paperwork. Interestingly, Victoria’s contract says she must use Suraya’s recommended legal representatives and is not allowed to find one of her own.

PATRONAGE

The games continued until 2017, when she received a notice that completion was due, and she needed to pay stamp duty and other legal fees in order to free up the mortgage payment. “It’s like they woke up one morning and decided they needed Sh300,000 upfront. And they pressured us to pay within a week.” Then Suraya went quiet again.

Victoria now owes Sh1 million in legal fees that she will never recover, and is unable to get her house.

The Lynx Royal apartment — for which Victoria and her chama made a 20 per cent down payment on the total value of Sh3.7 million for a one-bedroom house — fared slightly better. Construction was slow, but it progressed … except it never met the May 2013 completion date. The year 2014 came and went with the construction stalled, as did 2015. In early 2018, Suraya representatives met with the homeowners and offered to hand them letters of completion that would allow them to move into the houses as is.

“But they were a safety hazard,” says Victoria. “They were just giving us the skeleton and telling us to finish on our own. There were no fixtures, no finishings, no electricity.”

At a subsequent meeting, Suraya reps said they had acquired supplementary funding from I&M Bank to finish the buildings. “But even the lady who was speaking to us did not sound convinced of what she was saying,” Victoria says.

Things continued apace in 2019, only for investors to wake up to the news that Lynx Royal was about to be auctioned off. In total, Victoria’s chama has paid Sh3 million. It remains to be seen if they will ever recoup their money.

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To date, Suraya’s most successful project has been the Spring Valley Business Park, which houses their offices and the sample show houses. Surayas claim to be the owner and project developer of the business park, a mixed-use development comprising shops, offices and a four-star hotel. But is it?

Some investors think the couple may be enjoying political patronage and protection, otherwise how have they managed to lift such large sums off a number of innocent Kenyans without being arrested or investigated? And where is the money going, anyway?

Wairimu Thumbi, also a Suraya investor who has been front-lining efforts to get the couple investigated, estimates that they have collected at least Sh1.5 billion in down payments.

“We started WhatsApp groups for the different properties and they have been filling out surveys indicating how much money they have spent. So far — and this is a conservative estimate — we have about 500 people paying an average of Sh3 million per unit. We haven’t even factored in the diaspora market. Also, many local investors haven’t filled the survey yet. And finally, this does not take into account how much financing they got from the banks.”

So who might this political patron be? One name came up: Mr James Macharia, Transport Cabinet secretary. The Saturday Nation reached out to him.

“I have no stake in the Suraya Group of Companies. Not even one per cent,” he says. “In 2011, together with two others, (I) acquired the Spring Valley Business Park on Lower Kabete Road. The offices of Suraya are in that building. They tried buying it but I do not think they have paid for it.”

According to the Suraya website, the business park is a Suraya development. This is a claim the CS disputes. “They did not build it,” he says. “The Spring Valley Business Park is a separate company.”

Sue Muraya refused to comment for this story, saying she was busy and would only be able to respond in a few weeks’ time. 

However, Pete Muraya had said in earlier interviews that Suraya has fallen victim to economic circumstances — among them the collapse of Imperial and Chase banks in October 2015 and April 2016, which, he says, had invested heavily in real estate and whose failure hurt the real estate market.

As a result, other banks became wary of lending to developers. He also says the law capping bank loan interest rates, adopted in 2017, affected his business as banks slowed down their lending to individuals and businesses to focus on safer government securities.

Pete also says some buyers stopped paying for their properties as things stalled, while contractors downed their tools. However, Suraya’s investors do not believe this to be the truth.

The DCI says it is following the money trail to establish whether this is a case of fraud or just poor financial planning.

 

This article first appeared on the Daily Nation