Slow pace of Nairobi housing construction ‘worrying’

April 2, 2014
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Construction of new houses is growing at 7.5 percent of government targets with only 15,000 new units in 2013 against a target of 200,000 housing builds a year in the city. Photo/XINHUA
Construction of new houses is growing at 7.5 percent of government targets with only 15,000 new units in 2013 against a target of 200,000 housing builds a year in the city. Photo/XINHUA

, NAIROBI, Kenya, Apr 2 – Property development in Nairobi County is lagging behind, according to a new report by the Kenya Property Development Association (KPDA) and HassConsult Limited.

The report released on Wednesday in Nairobi indicates that construction of new houses is growing at 7.5 percent of government targets with only 15,000 new units in 2013 against a target of 200,000 housing builds a year in the city.

KPDA Vice Chairman Muchai Kunyiha cautioned that at this growth rate there will not be enough housing in future as Nairobi’s population is set to increase.

“The city is heading for extreme shortages in urban middle class housing and failed development goals, based on current trends. The housing shortage in Nairobi is acute, and deteriorating,” he said.

According to the report, developers are facing new challenges that include increase in construction permit fees from 0.006 percent of the cost of construction to 1.25 percent as well as a widened spread between the Central Bank of Kenya’s base rate and commercial bank lending rates.

“Nairobi has declared its intention to emerge as a world class city, but this depends on a sharp increase in construction, where current trends are instead slowing down the development industry’s rate of growth,” Kunyiha said.

The report also indicates that most developments being planned are in Embakasi and Kilimani both having more the 1,200 units approved while the least approved plans have been for Thome and Githurai estates.

A total of 2,438 planning approvals by Nairobi City Council in 2013 were for 628 detached houses 795 semi-detached houses and 13,914 apartments, giving a total for Nairobi of 15,337 planned new homes.

Land availability is uneven across the city with Runda having over 470 vacant plots suitable for development while Kilimani has just 12.

The Jones Lang LeSalle Global Real Estate Transparency Index, used by investors globally to assess the safety and appeal of regional real estate investments currently rates Kenya at 67 of 97 countries for the quality of information on its real estate industry.

“The production of an annual report in this kind of detail and depth is a key plank in the criteria for getting Kenyan property re-graded as a transparent investment asset,” said KPDA Chief Executive Officer Robyn Emerson.

Emerson said there are only 22,000 active mortgages accounts in the country.

“That is a lower number, we need more, the lending rates needs to be reduced for the long run, length of mortgages should also be increased so as to have more mortgage accounts,” she said.

She also urged the government to work on infrastructure that includes roads, water, and electricity so as to ease the burden of developers.

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