During the week, Nairobi Metropolitan Services Director of Housing Charles Sikuku announced that 1,562 low-cost housing units within the government’s affordable housing Pangani Estate were set for completion in December 2020.
The 5.0 billion shillings Pangani Estate being developed by Technofin Kenya is part of the Nairobi Urban Regeneration Plan aimed at delivering approximately 12,000 low-cost housing units in Nairobi’s old government estates by 2030.
Other areas designated for the redevelopment being Jeevanjee/Bachelors Quarters, Ngong Road Phases I and II, Uhuru Estate, New Ngara, Old Ngara, and Suna Road Estates. Despite the disruption caused by the Covid- 19 pandemic, the project which was launched in December 2018, has been encountering delays in its implementation due to bureaucracy and lack of land documentation.
On completion, phase 1 of the project will comprise of five blocks with 1,562 housing units, out of which 952 units will be under the affordable scheme while approximately 610 three-bedroom units will be priced as per the market rates.
The affordable housing program has continued to take shape with approximately 228 housing units delivered in October 2019 through the Park Road Project Phase 1, while other projects such as Shauri Moyo, Makongeni, and Starehe houses are still underway.
Despite the growing demand for the affordable housing units, evidenced by the relatively high number of approximately 300,000 individuals who have registered through the boma yangu portal, the implementation of affordable housing projects has been sluggish and the initiative is expected to fall short of its 2022 target of delivering 500,000 housing units.
Some of the challenges facing the initiation and implementation of the projects include; (i) bureaucracy and slow project approval processes, (ii) the pending operationalization of the Integrated Project Delivery Unit which was tasked with being a single point of regulatory approval for developments, infrastructure provision and developer incentives, (iii) failure to fast track incentives provided in support of the affordable housing initiative, (iv) ineffectiveness of Public-Private Partnerships, and, (v) the current economic slowdown due to the ongoing pandemic.
“In our view, if successfully delivered, the Pangani Estate project will enhance Kenyans confidence in the affordable housing program and thus encouraging more potential homeowners to join the boma yangu platform. However, given the negligible number of units delivered compared to existing demand, we expect the housing deficit to expand even further driven by the relatively high population growth of 4.0 percent per annum, compared to the global average of 1.9% according to World Bank,” says Cytonn.
Therefore, to accelerate the supply of housing units, the government must embark on resolving the above challenges in addition to investing in urban planning to enhance sustainability and also invest in infrastructure around the satellite towns to open them up.
During the week, the Kenya Mortgage and Refinance Company (KMRC), a Treasury backed lender, announced plans to lend approximately Kshs 37.2 bn out of the Kshs 40.0 bn raised from institutions such as World Bank and Africa Development Bank to Kenyans earning a maximum of Kshs 150,000 per month and seeking to purchase affordable housing units.
The mortgage loans will be capped at Kshs 4.0 mn for those seeking residence within the Nairobi Metropolitan Area (NMA) which also covers Kiambu, Machakos, and Kajiado, and at Kshs 3.0 mn for all other areas outside the NMA. According to the facility’s CEO, Johnstone Oltetia, while 80.0% of the funds will be directed to affordable housing, the rest will be availed for upper-middle-income housing units at normal market lending rates.