Milliam Murigi @millymur1
When President Uhuru Kenyatta announced his government’s Big Four Agenda, most real estate veterans dismissed plans to provide more than 500,000 affordable homes in the next five years as unrealistic.
However, some developers are proving them wrong by introducing projects offering homes from as low as Sh1.1 million to Sh4.5 million for a three-bedroom house.
Such homes normally cost between Sh7 million and Sh10 million depending on location. “Housing is basic need and we have realised that middle income earners who earn between Sh80,000 to Sh200,000 have been neglected for long.
That is why we launched our first project consisting of affordable, stand-alone houses along Thika road,” says Joseph Nderitu, Director Banda homes.
The company was started last year and claims to have sold more than 300 units. “We are using normal construction materials used by other developers but we have managed to lower the cost because we source our materials directly without involving middlemen,” he says.
The company is enjoying economies of large-scale production by sticking to similar exterior designs, thus lowering the cost of labour and raw materials. Involving prospective homebuyers from early stages of construction until the house is finished has been a big help since any mistakes are rectified early.
“We are selling our houses off-plan, meaning that once you book your plot with a deposit of Sh1.5 million, we start construction immediately.
This also gives them time to pay the remaining amount within 10 months,” he adds. In Nairobi alone, only 18 per cent of residents own their houses while the rest live in rentals.
To live a nice three-bedroom house near the central business district, city residents have to part with more than 50 per cent of their salaries. Kenya’s housing market has also failed to meet the ever-rising demand in the lower-income segment of the economy, pushing more than 60 per cent of those living in Nairobi and other towns into informal settlements.
Nairobi, for instance, gets only an average of 15,000 units out of the 150,000 demand per year, underlining the fast pace at which prices are rising. Banda Homes is not the only company, which is offering affordable houses. In Kiambu county, Digro Squired Investment is selling houses in apartments at Sh1.1 million while Belasi Developers is offering homes at Sh3.55 million.
Similarly, a housing cooperative society, E-Farm is selling houses at between Sh3.5 and Sh4.5 million. “I would like to urge fellow developers to stop concentrating on making huge profits but narrow down to solving this housing problem.
The notion that this is a money-minting industry should be buried and forgotten,” adds the 28-year-old director. Nderitu says incentives such as tax rebates which have been announced by the national government for developers who are ready to take up the burden of developing affordable homes need to be the main motivator to real estate companies which are in housing sector.
“Since there is political will this will encourage investors as well as developers to do more large-scale affordable housing projects. Developers don’t need to consider using alternative materials since in some instances when such materials are used the cost is even higher than the current price,” he says.
He urges real estate companies to also consider low –cost houses since this is another segment which has been forgotten by many, yet there are so many opportunities there.
“We are targeting 5,000 houses before the year end and the number will double next year since we want to ensure that 80 per cent of Nairobi residents have their own houses,” he says.