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Trends: When old is not gold for Nairobi housing

REAL ESTATE
By Dominic Omondi | Jan 20th 2022 | 5 min read
By Dominic Omondi | January 20th 2022
REAL ESTATE

 

Old Ngara Estate [File]

Old is gold. But for an aged dwelling in most estates in Nairobi and other urban areas, unless it is made of the precious metal itself, very few house-hunters see the value of moving into it.

It is a stark reality that has seen owners of old residential houses struggle to attract tenants. It is even worse that tenants are spoilt for choice as the market is flooded with well-serviced and impeccably finished apartments.

Evans Munya, a landlord, says the newer houses cropping up around his apartment in Nairobi that was completed some five years ago have become a threat.

“We have been losing some tenants to the new apartments,” he says, adding that the difference between the so-called new houses and old ones is only the degree of newness.

They have fresh paint and spruced up finishing, which tends to change every year.

Mr Munya, however, says that the market turns into a battle of price, and in a country where people are price-sensitive, the old houses will always have clients as long as they are priced cheaply.

But they are stuck with old tenants who continue to pay low rents despite the cost of living rising sharply over the years.

Johnson Ndege, a real estate expert, gives the example of a new two-bedroom house and another old one with a similar number of rooms built in the mid-1990s, next to it.

The two houses are in Kabete.  

He says the rent for the new one is Sh45,000 while it is Sh25,000 for the older building. “I think they (older houses) only have a leverage of price which also comes with some compromise,” says Mr Denge.

Retaining clients

Perhaps, the landlord is not in a rush to hike the rent for the old house as they have already recouped their initial costs. But they cannot do that with ease.

“Increasing price is another way of chasing away tenants,” says Munya, and they prefer retaining a stable and reliable tenant even if it means charging them lower rent.

Moreover, with the glut in houses, which was aggravated by the Covid-19 pandemic, landlords cannot afford to lose tenants.

Indeed, official data has shown that bad loans in the real estate sector jumped by Sh9.1 billion in the first quarter of 2021, as the property market struggled to shake off the adverse effects of the Covid-19 pandemic.

The mad rush out of the old is also affecting offices, with the earlier trend where people would pick old houses for offices fading away.

This is because, apart from legacy issues such as lack of water, these places are easily being turned into development sites as the houses become obsolete

“People are looking to re-develop. Tenants invest in these houses and do repairs only for the owners to come and say they have found someone to develop the land,” says Denge.

He says this is especially the case in middle-class estates where zoning rules have been relaxed.

Design aspects

“Most of these old houses also did not have a proper power rating, so you have problems with electricity. “Today, you can easily rate power usage,” Denge says.

The same thing goes for water. Most of the old houses did not have capacity to store enough water.

Most of the old and average estates such as South C in Nairobi had low populations until recently, others being Ngara, Buruburu, Pangani and Kariokor.

“The older houses, even when you build the water tank, you don’t put enough water storage because the water was never going away. Today, the population has increased, there are scarce resources, and water is not always enough,” Denge says.

Old houses are laggards because of design aspects, with Denge giving the example of the new architectural designs that are lacking in older houses.

Developers today also try to be environmentally friendly with the emphasis being put on things such as natural lighting, saving on electricity, proper piping and security.

Conscious expatriates will want that to comply with global arrangements on environmental, social and governance expectations.

Additionally, cars were not common in the early 90s. About 30 or 40 years ago, a typical middle class household would only dream of owning a car.

And most of the houses then were not designed with parking in mind, especially for the middle-class estates.

“Today, parking is an issue. The new buildings have that,” says Denge.

In the end, it looks like a trade trade-off. You trade off these luxuries and facilities for the new building for the so-called less rent.

Old houses that have been able to survive the onslaught of newbies are the ones that are located in certain locations as well as being close to certain amenities.

The appeal of houses, however, goes beyond price.

Elijah Kinyua, a real estate agent, agrees that the trend has been for tenants to be hooked by the new buildings with provisions for washing machines, air circulation among other amenities.

However, he also feels that old houses equal old money. “They rule the market thus have no pressure to do anything,” says Kinyua noting that most of the old houses in Nairobi, for example, are located in strategic places such as Muthaiga.

“A modern villa in Vipingo Ridge will never beat a Muthaiga house,” he explains. “Which would you prefer: The traffic jam on Thika Road or the two corners it takes to get to the city centre?” he wonders.

Besides location, other factors that transcend the old-new house dichotomy, Kinyua says, include school fees and proximity to other social amenities.

Moreover, there are just those tenants that will just be concerned with how mature the trees are and the good neighbourliness, according to Elijah.

Owners of certain old houses are giving tenants more lee-way. You can build your own driveway, tiles, you get water from neighbouring properties that have sunk boreholes, they have tried to differentiate rates. When somebody moves out they try to repair, put in new cabinets, tiling, and also improve the façade outside like painting so that they attract new tenants.

Expensive materials

Interestingly, some of the posh areas in Kenya are old going by the floor materials, according to data contained in the census results of 2019.

Most of these houses are in towns like Eldoret, Nairobi, Kiambu, Kisumu or Athi River, where owning what can be described as a mansion comes at quite the cost. And they are old.

A good number of the houses in these areas have been built using expensive flooring materials, such as parquet, which is no longer fashionable.

In Nairobi, the houses can be found in Langata Sub-county with upmarket estates like Karen. There are also such houses in Westlands.

Perhaps it is time for Kenyan developers to build houses like in France, Finland and the United Kingdom, where there is a booming business for flipping houses.

With flipping houses, old houses are renovated and then sold. “And they only renovate the interior,” says Denge, adding that it is something Kenyans can also do.

With that, old houses can be sold like valued relics. Or like gold.

 

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