Connect with us

Hi, what are you looking for?

The sustained decline is an indication of an emerging trend where prices have transitioned from a continuous positive trend seen since the last quarter of 2014/FILE


Private developers urged to focus on volume to improve affordability

The country has witnessed a housing glut build-up for the past three years due to declining demand due to high property prices/FILE

NAIROBI, Kenya, Nov 5 – Pan African Housing Financier, Shelter Afrique has urged local developers venturing into the affordable housing space to help improve uptake and reduce property glut being currently witnessed.

Speaking in Nairobi, Shelter Afrique Chief Executive Officer Andrew Chimphondah said most properties in Kenya are over-priced and out of reach of many buyers hence the slow uptake.

“Most developers tend to add higher margins to the units they develop, which in the long run make such units rather expensive. This partly explains why there is a glut in the property market despite the reported housing shortage in Kenya,” Chimphondah said.

“My advice to local developers is that they would rather chase less profit and more volume because if they chase the profit and not the volume, they end up not having take-ups. They can achieve this by venturing into the affordable housing space,” Chimphondah said.

Developers have decried the high cost of land, high financing cost, poor infrastructure and lack of utilities, which they must provide, thus pushing property prices up as they pass the costs onto the end-buyers.

“Land is very expensive in Kenya, sometimes constituting up to 40 percent of the cost of the house – probably the highest in Africa. The good news is that under affordable housing, there are new technologies and new building materials that can help reduce constructions costs significantly,” Chimphondah said.

Prolonged glut

The country has witnessed a housing glut build-up for the last three years with many ready developments sitting idle with no takers as a result of declining demand occasioned by lack of affordability.

According to the Kenya Bankers Association Housing Market Index for the second quarter of 2019, house prices recorded further declines between April and June mainly due to a weakening purchasing power among prospective buyers.

The real estate ranks among the sectors with highest non-performing loans according to Central Bank of Kenya, prompting commercial banks to tighten their credit standards to property developers in order to reduce the level of bad loans in the sector.

Advertisement. Scroll to continue reading.
Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...