Access to water and electricity were the traditional ways through which we perceived that vital nexus between infrastructure and real estate (housing). Indeed, the most common question asked by prospective tenants in their search for a desirable home is how the state of water and electricity supply is.

This, most certainly, is largely occasioned by the fact that the country’s demographic explosion (at a 3% population growth per annum and fairly rapid urbanization) has far outstripped the growth and expansion of infrastructure available to equal the growth.

Access to electricity (% of urban population)

Access to electricity (% of urban population)

Source: Africa Development Bank

Access to reliable water supply (% of population)

  Rural Urban Total
Burundi 27.4% 77.2% 31.9%
Ethiopia 35.0% 92.7% 48.1%
Kenya 53.1% 87.5% 61.5%
Tanzania 65.5% 83.8% 70.3%
Uganda 85.6% 96.4% 87.6%
Rwanda 31.9% 68.8% 37.1%

Source: Africa Development Bank

From a comparative regional analysis, Kenya fairs well with regard to access to reliable water supply. I believe a lot can and needs to be done especially with regard to water harvesting during the rainy seasons to harness the economy’s optimal capacity for water demand/supply needs.

Access to electricity has not fared as well. Rapid industrial growth, growing urbanization and a population growth rate of 3% per annum are occasioning immense pressure on the economy’s electricity generation. The government now targets plugging an additional 5,000 megawatts between 2013 [Kenya Power 2013] and 2018 to the national grid in an effort to bridge the electricity deficit.

Property developers within Nairobi are now resorting to remedial measures to bridge the social infrastructure gap. Property development plans are increasingly incorporating drilling of bore-holes and installation of generators as part of the amenities available for would be tenants.

Transport Infrastructure and the future of property development

On a different front, growth and expansion of roads infrastructure is also propping up a new trend to real estate within the country’s urban centres. The construction of roads to erstwhile locked areas is occasioning an appreciation in the value of property in the immediate areas.

As such, tenants and investors in land as an asset are increasingly being compelled to take keen cognizance of such development plans with regard to determining the valuation of their asset (land) and/or rent charged. This will play a critical role in the medium to long-term as the country looks to broaden its transport infrastructure through such projects as the Kes 21.5 billion Lamu Port Southern Sudan Ethiopia Transport Corridor that involves the construction of a robust road network.

The correlation between transport (and predominantly roads) infrastructure and the appreciation of the value of property cannot be belaboured. Expansion of transport infrastructure, in its very essence, unlocks economic space and potential for greater exploitation and dividends and this is the key driver or rise in value.

Key Transportation Corridors in Sub-Sahara Africa

Corridor Length (km) % in good condition Trade Density (US$ mln per km)
Central Africa 3,280 49.00% 4.2
West Africa 2,050 72.00% 8.2
Eastern Africa 2,845 82.00% 5.7
Southern Africa 5,000 100.00% 27.9

Source: Africa Development Bank

As Kenya continues to increase its investment in the development of roads and rail infrastructure, the areas within the transport network corridors are poised to witness an appreciation of property prices. This will directly impact in the pace of property development and income generated through rent levied for occupancy.

 

[Image Credit: Construction Business Review]