What is the Status of Affordable Housing in Nairobi Metropolitan Area?

By Soko Directory Team / Published February 18, 2022 | 10:11 am

KEY POINTS

Affordable housing supply has remained a challenge in Kenya due to factors such as high construction costs, inadequate supply of development land, and, inadequate infrastructure. However, it continues to take shape in various counties including Nairobi.

KEY TAKEAWAYS

It is quite worrying that only 3.0 percent of the formal income earners can comfortably afford to own homes hence it is necessary to address this problem to enhance homeownership in the country.

In 2017, the President, H.E Uhuru Kenyatta launched the Affordable Housing program as one of the key pillars of the Big 4 agenda. The government planned to deliver 500,000 units by 2022.

Well, we are in the year 2022 and the government is already far out of reach since only about 1,000 units have been delivered through the Pangani and Park Road Ngara projects.

Even before the onset of the COVID-19 pandemic, the government had no sustainable plan on how to fund the initiative despite increasing its budgetary allocation for the sector by 75.0 percent to 10.5 billion shillings.

Now that this project was seemingly doomed to fail from the start, the big question we are asking today is, what is the status of affordable housing in the Nairobi Metropolitan Area?

What is Affordable Housing?

First, let’s get something straight – affordable housing refers to housing units that are affordable by that section of society with the median household income or below.

Affordable housing in Kenya are, therefore, units employees in the median gross income bracket – those earning a gross income of 50,000 shillings – can afford.

Assuming a maximum of 30.0 percent of their gross income is spent on housing costs, these are individuals who can afford to pay rent of 15,000 thousand per month and below.

ALSO READ: Kenyan Adults Without NHIF Cover Will Not Get State Services

According to the government’s BluePrint, affordable houses range between 1 million shillings to 3 million shillings per unit on average, and would therefore fit into the budget of two individuals earning at least 50,000 shillings each per month, which is the Kenyan median income.

The Affordable housing initiative in Kenya comprises three types of housing that target formal income earners as follows:

Social Housing – Designated for individuals earning up to 14,999 shillings monthly, accounting for 2.6 percent of the formal income earners (KNBS),
Low-Cost Housing – Designated for individuals earning between 15,000 shillings and 49,999 shillings monthly, accounting for 71.8 percent of the formal income earners, and,
Mortgage-Gap Housing – Designated for individuals earning between 50,000 shillings and 100,000 shillings monthly, accounting for 22.6 percent of the formal income earners.

With the above categorization indicating the initiative is targeting 97.0 percent of the formal income earners, it is quite worrying that only 3.0 percent of the formal income earners can comfortably afford to own homes hence it is necessary to address this problem to enhance homeownership in the country.

In a nutshell, while 74.4 percent of Kenya’s working population requires affordable housing, only 17.0 percent of the housing supply goes into serving this low to lower-middle-income segment.

This supply issue has remained a challenge attributed to factors such as high construction costs, inadequate supply of development land, and, inadequate infrastructure.

Status of Affordable Housing in Nairobi

Although less than 1.0 percent of the project target has been achieved, the initiative continues to take shape in various towns.

The table below indicates some of the notable ongoing affordable housing projects in the NMA;

Summary of Notable Ongoing Affordable Housing Projects in the Nairobi Metropolitan Area
Name	Developer	Location	Number of Units	Pricing (Kshs)	Status
Pangani Affordable Housing Program	National Government and Tecnofin Kenya Limited	Pangani	1,562	1 bed: 1.0 mn 2 bed: 2.0 mn 3 bed: 3.0 mn	Ongoing
River Estate Affordable Housing Program	National Government and Edderman Property Limited	Ngara	2,720	1 bed: 1.0 mn 2 bed: 2.0 mn 3 bed: 3.0 mn	Ongoing
Mavoko Affordable Housing Program	NHC through Epco Builders Limited	Machakos	5,360	1.0 – 3.0 mn (Affordable Housing) and 2.0 mn – 8.0 mn (Middle Income)	Initial Stages
Mukuru Affordable Housing Program	National Housing Corporation	Mukuru, Enterprise Road	15,000	–	Ongoing

Source: Online Research

Other projects on the pipeline are Shauri Moyo, Makongeni , and Starehe houses.

The private sector has also played a major role in the roll-out of these housing units to fast track their delivery and provide affordable housing financing to their clients below markets rates, with flexible repayment plans, and longer repayment periods.

Some of the projects by the private sector include;

Private Affordable Housing Projects in the Nairobi Metropolitan Area
Project Name	Developer	Location	Number of Units	Status
Kentek Ventures	Kentek Venture Limited	Ruiru	53,716	Ongoing
Moke Gardens	Moke Gardens Real Estate	Athi River	30,000	Ongoing
Habitat Heights	Afra Holding Limited	Mavoko	8,888	Ongoing
Tsavo Apartments	Tsavo Real Estate	Embakasi, Riruta,Thindigua, Roysambu and Rongai	3,200	Ongoing
Unity West	Unity Homes	Tatu City	3,000	Ongoing
Greatwall Gardens	Edermann Property	Mlolongo	2,200	Ongoing
RiverView	Karibu Homes	Athi River	561	Ongoing

Source: Online Research

Despite the private sector’s efforts in complementing the government’s efforts in achieving the initiative, the roll-out of the projects has remained a challenge.

This is mainly due to the overreliance on traditional sources of funding projects such as bank debt as opposed to alternative sources of funding.

Additionally, the bureaucracy and the slow approval processes in the construction industry have contributed to the delays in some of the projects breaking ground, especially during the lockdown period when operations were temporarily halted to adhere to COVID-19 measures.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team