Want to reap big? Try housing

The housing deficit in Kenya stands at 2.5 million in 2015 and continues to grow at a rate of over 200,000 units a year. This is a sector that will attract the attention of investors at the Global Entrepreneurial Summit.

There is a proliferation of informal settlements in urban areas, with 60 per cent of the population living in slums. Currently, Kenya’s annual housing requirements stand at an estimated 300,000 units. The country’s State-run National Housing Corporation estimates the current urban housing needs at 150,000 units per year to cater for the backlog. However, it is calculated that the current production of new housing in urban areas is only about 30,000 units annually, a shortfall of 80 per cent.

A survey by the Central Bank of Kenya (CBK) a few years ago revealed there were less than 20,000 mortgage loans in the country in 2013, just a small fraction of what is required by the population of the capital city Nairobi alone, which currently stands at over four million people. Nonetheless, the real estate sector in this country grew by 2.6 per cent in the second quarter of 2014, according to the Kenya National Bureau of Statistics (KNBS) and the growth is likely to be higher this year, with more investments and new building technologies.

Investment opportunities in the housing sector are enormous and still growing rapidly. According to experts, the growth in the nation’s real estate sector is very promising, especially with more investment and new cheaper building and construction technologies.

Leaders in the real estate business say there is not shadow of doubt that the property market in Kenya is strong, as is evident from even a mere a glance at the property prices.

The real estate sector is surely a key pointer for the growth in an economy. Many families, especially in the urban areas, still live in overcrowded homes, typically with only a single room and inadequate ventilation. In many of the country’s rural areas, most houses or homes are still built of mud walls with grass-thatched roofs. Families are at high risk of diseases such as malaria, respiratory infections and jigger infestation.

Housing in rural areas is privately owned. Most of these homes, built with traditional materials, deteriorate in a relatively short time; an increasing number of people now build their homes with relatively permanent materials. The national government is responsible for all housing projects and works closely with the county authorities.

Many new housing projects have been undertaken with financial aid from the NHC. According to the latest information available, the total housing stock in the 1980s stood at 3,470,000, with 6.1 people per dwelling.

The poor, especially children and women, the elderly and people with disabilities, are worst-hit. Under the new devolved government system, housing delivery is the responsibility of the county governments. There is a risk that lack of effective coordination and lack of technical competence at local level can stifle the provision of housing.

In addition to limited access to land (68 per cent of Kenyans are without land documentation or tenure security) and insufficient income, lack of affordable housing finance is another limiting factor for low-income families to improve their habitation conditions. Kenya is the global headquarters of United Nations Habitat as well as the United Nations Environmental Program (UNEP). UN Habitat was formed to ensure that all human beings in the world, regardless of their economic and social status, live in decent housing structures that are also environmentally friendly.

Habitat Kenya engages in housing micro-finance and institutional technical assistance to financial service providers building their capacity to offer viable and scalable housing micro-finance products for low-income households. The project is funded by the MasterCard Foundation and managed by the HFHI Centre for Innovation in Shelter and Finance.

A new building technology known as KOTO has recently been introduced in Kenya. It is an expanded Polystyrene building system of lightweight panels that provide permanent form work to reinforced concrete for columns and beam structures. It will find a ready market.