The city of Nairobi faces rising challenges as far as housing its growing population is concerned. A joint report released by the Kenya Property Developers Association and Hass Consult paints the housing shortage in Nairobi as “acute and deteriorating”.
Before we delve into the highlights of the report, let’s have a quick look at facts about Nairobi and its housing market:
- According to a Kenya Open Data Survey in 2014 , it was estimated that there were approximately, 3.14 million people living in Nairobi county. Nairobi City has an area of 684 square kilometres.
The Nairobi Metropolitan Region – consisting of Nairobi, Kiambu, Kajiado and Machakos counties – had a population of approximately 6.7 million in 2009. This region has an area of approximately 3,000 square kilometres.You can download the Nairobi Metro Region Concept document here. You can also read about it here.
- Almost 60% of the population dwells in informal settlements where access to water and sanitation infrastructure is either inadequate or unavailable. Nairobi’s County Assembly recently approved more allocation of funds to energy, water and sanitation infrastructure in the city’s wards. Ksh 25 million would be diverted from tourism the development kitty towards installing new sewer lines and upgrading existing ones in areas such as Mathare and Kayole.
- The Nairobi County government is in charge of issuing construction permits within the city. According to the Doing Business Report 2014, Kenya ranks 47 out of the 189 economies when it comes to ease of obtaining construction permits. There are 9 steps required in the process, starting from getting architectural drawings approved to obtaining connections to main utility lines – water and sewer.
The report indicates the following:
- Nairobi’s population is set to grow to about 5 million in 2020 – 6 years from now. Currently, Nairobi’s population is estimated to be 3.5 million.
- Nairobi city alone, requires approximately 200,000 housing units per year in order to sustain the growing middle class by the year 2030. However, only 15,000 units were released into the market in 2013.
- The cost of construction permits has risen from as low as 0.006% of construction cost to 1.25% of the construction cost
- Cost of land and its availability are presenting new challenges to property developers. The cost of land in the city is escalating rapidly. The availability of land within Nairobi is also described as “uneven”.
- Lack of proper planning: The county and central governments are urged to provide the necessary and essential infrastructure such as connection to water and sewer lines as well as provide roads.
- Lending rates: The cost of financing property development has been highlighted. The Central Bank of Kenya has maintained the base lending rate at 8.5% but developers and home buyers have to contend with rates that at least double the base lending rate.
Cross-roads: Who has the real, dependable data on housing in Kenya?
Numbers ranging between 150,000 and 200,000 have been floated around as representing the housing demand in Kenya. However, the report highlighted above indicates that the demand for middle-class housing in Nairobi city alone is 200,000 units per year. That explains the 7.5% units supplied in 2013 alone. BUT, how many units are required per year in the whole country? In other counties?
Apparently a housing survey was done in 2011 by the then Ministry of Housing. It is yet to see the light of day. Wouldn’t this be a fundamental and crucial source of data from the government? What happened to it? What information forms the basis of housing supply in Kenya? Who can explain the “visible” vacancies in residential areas?
In short, more has to be done in the collection of data on housing in Kenya. While counties are touted as the “new investment frontiers”, investment decisions must be based on current, dependable and fresh data. The KPDA-HassConsult report marks the beginning of this.
[Image Credit: Business Daily]