This archive report was first published on 8 July 2020.
Kenya's Urbanisation Boom: Opportunities and Challenges ¶
As the country's population continues to grow, urbanisation is becoming an increasingly pressing issue in Kenya. According to the UN-Habitat, Africa is urbanising at an annual rate of four percent, making it the fastest urbanising region in the world. By 2050, three out of every four Africans are expected to be living in towns, with Kenya lagging behind the sub-Saharan average of half the population.
However, there are solid indicators that more and more Kenyans will migrate to Nairobi and other urban centres in the coming years. This rapid urbanisation will put pressure on social amenities, including schools, healthcare, transportation, and other services. Furthermore, the strain on urban spaces will exacerbate the effects of climate change, making it essential to implement purposeful interventions to mitigate these impacts.
Despite the challenges, a huge urban population presents a significant opportunity for investors. With a sea of humanity in need of basic necessities, there are ample opportunities for businesses to provide goods and services. Housing is an especially alluring sector for investors, with the UN-Habitat estimating a housing deficit of 2 million units in Kenya. To merely retain this deficit, the country must build at least 250,000 houses every year, yet the current average is only 50,000 annually.
Private investments in housing must be solicited and readily embraced, with the government playing a crucial role in incentivising investors with a tax regime and friendly policies and regulations. Streamlining land governance and documentation to weed out entrenched cartels, conmen, and profiteers who raise the cost and risk of investing in land in Kenya would be a good starting point.
Population and urbanisation explosions underscore the value of urban planning, with land being a finite resource that a bulging human race must share. The growth of work-and-live communities, such as Tatu City, is a good example of this global urbanisation trend. Ideally, such investments should be big on climate control, manifest in their choice of construction material, dedicated green spaces, landscaping efforts, and land occupation density.
However, as the housing investment boom in Kiambu, Kajiado, and Machakos counties proves, the future of fine urban living is likely to be away from the city centre. These localities offer abundance of land, serenity, and a cleaner environment, making them attractive alternatives to Nairobi. The Hass Housing index confirms that land and property are likely to be cheaper to rent or buy in these counties than in Nairobi.
There are numerous gated estates in Kenya, with some being completed, others ongoing, and others planned. Examples include Edenville Estate in Kiambu, Bahati Ridge in Thika, and Green Park Estate in Athi River. While few of these estates can rival Tatu City in size and grandness of design, they offer a range of housing options, including villas, townhouses, bungalows, and cottages.
As the housing market continues to grow, it is essential for buyers to be cautious and interrogate investors' portfolios carefully. The best regulator of the housing sector is undoubtedly the market forces, and buyers must be aware of the risks involved in investing in the sector.
The author is the Managing Director, Maven Design & Build Ltd, a Kenyan-based construction consultancy.
