Future of real estate is bright in the fourth industrial revolution

By Shazeen Rahemtulla | Wednesday, Dec 25th 2019 at 12:32
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For the past two decades, the Kenyan real estate market has grown exponentially as evidenced by its contribution to the country’s Gross Domestic Product (GDP), which grew from 10.5 per cent in 2000 to 12.6 per cent in 2012.

In 2016, the sector contributed 13 per cent to the GDP. Iconic high-rise buildings dot the skylines across the country, and large-scale mixed-use developments are being developed to serve a myriad purposes. The number of projects being carried out indicate that the construction industry is only set to grow over the coming years.

A BMI Research shows that the contribution of the construction sector in Kenya will steadily rise until at least 2026, and will outperform similar sectors in other sub-Saharan countries. The growth of the sector shows that the market is trying to improve for the future. Environmental impact of human activity is a major concern, considering that the environment is being damaged faster than ever before.

The United Nations Environment Programme notes that the rate of environmental damage is growing across the planet. It also states that the worst impact of this damage can only be avoided if the entire planet acts immediately. There is a general shift to make sure that buildings are put up in ways that conserve energy, reduce their carbon footprint, and do not significantly increase surface temperature. This is the way to go, as the fourth industrial revolution beckons. Smart buildings also use automated processes and high-tech designs to reduce water and energy consumption and improve indoor air-quality.

Developers have lamented the cost of constructing smart buildings. The expertise needed is not widely available in Kenya, and those who provide smart building design services charge a premium. The computing technology used for automating smart processes is also an additional cost to be borne by the developer and transferred to the buyer. This means that smart buildings tend to be more expensive and therefore less competitive in the market.

In the long-term, however, smart buildings are winners in cost-effectiveness. The energy and water conservation properties of smart buildings are far superior to traditional buildings. The Dormans Coffee warehouse at Tatu City, for example, produces 1MW of electricity from solar panels that are mounted on its roofs. This is more energy than the factory needs.

The cost of electricity for such an establishment can be reduced to the bare minimum, and the excess energy can even be used as a revenue stream by selling it to the grid. That is when not counting the environmental savings made by reducing overuse of water, and underutilisation of natural light, and air movement for cooling. 

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