Kenya’s low cost housing set to boom in 2014

The low cost housing sector in Kenya is set to see better days as developers and financiers begin to shift their attention to this segment of the market, which they previously viewed as unprofitable.

As the high-income housing market becomes saturated amid falling demand for high-end homes, many developers are now unveiling low cost housing projects targeting individuals earning less than 30,000 a month.

The Mortgage Company’s managing director Carol Kariuki says the focus on the lower end of the market is a natural shift by developers to generate a new income stream.

“The next market is the lower end of the pyramid. This is where most people who don’t own homes are, and many of these developers have realised that there is money in the numbers,” says Ms Kariuki.

On Wednesday, mortgage financier Housing Finance launched an initiative that will make it possible for individuals to own homes for as little as Sh1.6 million.

The Makao housing project, introduced in 2007, will now offer land owners with a selection of 57 different home designs with the price ranging from Sh1.6 million to Sh27 million. The price will cover professional fees of architects, legal advisers, project managers, engineers, quantity surveyors and consultants.

“Makao seeks to address the key challenges home owners face during the construction period, which include poor supervision, cost over-runs, fluctuating prices of materials, delay in completion of project, poor quality materials, theft and unqualified fundis,” said Housing Finance boss Frank Ireri.

He said the initiative will save its potential customers up to 30 per cent in costs, adding that the lender will offer entire financing.

Housing Finance joins a growing list of companies that are eyeing the low-cost housing market. In 2012, Jamii Bora Makao, managed by Urbanis Africa, launched several low cost housing projects in Kisaju on the outskirts of Nairobi.

Phase one of the project involved construction of 950 low cost housing units, with a two-bedroom house going for as low as Sh1.5 million.

In the second phase, which was launched towards the end of 2012, the firm is building an additional 1,250 low cost homes in Isinya, Kajiado County. The project comprises three and four bedroom houses going for Sh2.5 million and Sh5.4 million respectively.