This archive report was first published on 4 November 2019.
Kenya's housing market has been grappling with a prolonged property glut, with many ready developments sitting idle due to declining demand caused by unaffordability. According to Shelter Afrique, a Pan African Housing Financier, this issue can be addressed by encouraging local developers to venture into the affordable housing space.
Speaking in Nairobi, Shelter Afrique Chief Executive Officer Andrew Chimphondah pointed out that most properties in Kenya are priced out of reach for many buyers, leading to slow uptake. He attributed this to developers adding higher margins to their units, making them expensive in the long run.
“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,” Mr. Chimphondah said.
Mr. Chimphondah advised local developers to focus on volume rather than profit, suggesting that they can achieve this by venturing into the affordable housing space. He noted that land costs in Kenya are high, sometimes constituting up to 40% of the cost of a house, which is one of the highest in Africa.
However, Mr. Chimphondah highlighted that under affordable housing, there are new technologies and building materials that can help reduce construction costs significantly. He emphasized that developers have to provide utilities and infrastructure, which adds to the cost of property development.
The country has witnessed a housing glut build-up for the last three years, with many ready developments sitting idle due to declining demand. 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.
Published on November 4, 2019, this article highlights the challenges facing Kenya's housing market and the need for developers to adopt a more affordable approach to address the property glut and improve uptake.
