Shortage of houses in Nairobi
There is a looming acute shortage for housing in Nairobi County for the urban middle class, a new report has revealed. According to the STATE OF DEVELOPMENT REPORT, which was released by the Kenya Property Developers Association and HassConsult last week the city’s population is growing at an average of 7 per cent per annum however housing is growing at a snail’s pace.
As reported, the middle-income class is increasing at a very fast rate and the housing gap is expected to hit a shortfall of 1.6 million units by 2030.
The report attributes the much foreseen housing shortage in the city to failed development goals, sharp increases in land rates and higher city council construction and permit fees which were raised by between 200 times and 1,250 times their previous level; For instance, the country’s aim was to be building 200,000 housing units a year in Nairobi to create a world class middle-income city by 2030. But in 2013, just 15,000 housing units were planned with more than 90% being apartments.
The gap between lending rates and the Central Bank of Kenya’s base rate has also been blamed for further intensifying interest rates for the financing of both development and property buying.
“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,” said Robyn Emerson, CEO of KPDA.
HIGH PROPERTY PRICES
The prices of property in the country are also reported to have risen almost three-fold in the last decade, making home ownership a preserve of the rich as majority of the population are forced to contend with renting. As the STATE OF DEVELOPMENT REPORT indicates, “the market is underleveraged, with a near insignificant proportion of mortgage financed purchasing, and ongoing demand growth and rising shortages – making for a resilient price trend through all shocks.”
The report also points out the lack of affordable home loans which is steering the rising demand for the rental market. It’s believed that only 22,000 mortgages have been serviced in a country of about 42 million.
According to Ms Emerson the STATE OF DEVELOPMENT REPORT, which is Kenya’s first ever annual report on the state of development is a key plank in the criteria for getting Kenyan property re-graded as a transparent investment asset.
Currently, based on the quality of information on its real estate, Kenya is ranked 67 of 97 countries on the Jones Lang LeSalle Global Real Estate Transparency Index. Investors use the index to assess the safety and appeal of regional real estate investments.