THE AFRICAN BUSINESS FORTUNE- REAL ESTATE
west of central Nairobi, land prices rose by more than 25 per cent over the period.
“ With the devolution plan driving infrastructure development in outlying areas, there are significant prospects for further real estate sector growth,” Charles Odere, chairman and CEO of real estate company RE / MAX Kenya. New shift
Land inflation has already begun to change the shape of Kenya’ s property market, prompting a shift away from standalone houses and towards multi-unit buildings.
The KBA noted that apartments, which saw relatively higher price movements last year, accounted for more than 90 per cent of the units offered in the fourth quarter, followed by maisonettes( 5.8per cent) and bungalows( 1.41 per cent).
“ This justifies the increased appetite and relative affordability for apartments by an apparently growing middle class,” the report said.
Developers are increasingly building up rather than out, as they seek to maximize returns against a backdrop of limited urban space.
“ We are seeing a lot of lending for housing being channeled to residential projects in the outskirts of major hubs like Nairobi. Lending for commercial development of multi-unit housing is particularly significant,” said Jared Osoro, KBA’ s director of research and policy.
Appetite for new multi-unit housing saw the value of approved residential building plans climb by 11.2 per cent in 2015, according to another data by the Nairobi Directorate of Planning, Compliance and
Just over 60 per cent of the approved building plans were for residential developments in and around the capital, for a total value of Sh147bn($ 1.5bn).
Enforcement.
Just over 60 per cent of the approved building plans were for residential developments in and around the capital, for a total value of Sh147bn($ 1.5bn). Investment in non-residential developments, meanwhile, declined marginally, falling by less than 1per cent to Sh95.18bn($ 936.5m). Housing deficit Despite continued investment in boosting residential housing stocks, Kenya continues to experience a nationwide housing deficit.
Although 50,000 new residential units are added to housing stocks annually, national demand for new housing runs at around 250,000 units per year, Jacob Kaimenyi, cabinet secretary in the Ministry of Land, Housing and Urban Development, told media earlier this year.
In early February the government announced plans to provide both financial and non-financial incentives to the private sector to help bridge this 200,000-unit gap, which mainly exists at the lower end of the housing market.
Among the incentives proposed is the provision of serviced land to developers, access to affordable financing and legislative reforms of land-related laws. A national housing fund to help finance social and low-cost housing is also being considered, Kaimenyi said.
“ Financing remains very costly in Kenya, not just for buyers but for developers as well,” Chetan Hayer, director of real estate developer Nirbhau Group, told OBG.
“ In addition to these kinds of incentive programmes, we need to reform the way that mortgages are structured to ensure funding can be released during construction, not just when properties are completed.”
The government will be looking for these incentives to encourage some developers to shift their focus towards mass housing schemes and entry-level residential projects. Such projects could become more attractive to the private sector, particularly if demand and sale prices in the middle-to-high end of the residential sector continue to stall.
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