East African Business Week

Lack of adequate affordable housing units in Kenya, has reached "crisis levels" and players in the Kenyan real estate industry are now warning that "Government must move in with speed" to reverse a situation which is escalating by the day.
 Despite significant development activity in the Kenyan real estate sector spurred on by Government incentives, housing remains inaccessible to a majority of low income Kenyan citizens.
Statistics show an estimated 80 percent of new housing units being supplied by property developers are being targeted only at the high end market.
 Market factors such as high cost of land, poor infrastructure, and high cost of property financing have further complicated the Kenyan housing situation by drastically shoring up the cost of property shattering any dream of owning a home for many Kenyans in the low income classes.  And players in the market now charge that Government must be more proactive in reversing a worsening crisis.
 Key among urgent interventions which are deemed as key to reversing the situation according to Nairobi City based real estate developer Daniel Ojijo, is the adoption of private public partnerships by Government and private players with a view to bringing down the overall cost of developing housing in the country.
 Ojijo who is the chairman of Mentor Group Holdings while speaking to EABW on the sidelines of this year's Kenya Homes Expo regretted that most developers had not shifted to the low end housing market, discouraged by market factors such as high cost of land, energy, finance, building materials as well as poor infrastructure.  "The government needs to address these challenges," said Ojijo. "It's a high time that Government came up with more practical ways of empowering developers to lower the cost of units for the sake of lower income groups."   According to him, one of the probable panacea to significantly bringing down the cost of housing in the country today, is the provision of land by Government for public housing. "If the Government is buying land for IDPs, (Internally Displaced Persons), at a cost of a lot of billions, (Kshs) why can't they also buy land as a data bank in areas around the town and then partner with the private sector to provide public housing," he posed.
 Under this proposed arrangement, Ojijo, says the Government would besides securing land, only need to provide appropriate infrastructure as well as the designs for the housing units and then charge private developers with the setting up of the units.
 "The private sector has the capacity and the motivation as well to carry this out," said Ojijo.
 Noting that the private sector which is driven by profit motives would continually shun the low end of the housing market, Ojijo says its upon Government to make private players focus on the low end of the housing sector by offering subsidies and additional incentives.
 "What is happening right now is that eighty percent of the housing development being done is for the high end group because that is where the money is," he says.  To reverse this trend, Ojijo proposes that Government should zero rate tax on building materials. The Government, he further proposes, should come up with a special fund for developers concentrating their activities in the low end of the Kenyan housing sector
 "If a developer is borrowing at say a 15 percent interest rate it results in very high purchasing costs for the lower end income group, because the developer has to mitigate their cost for everything, from land to building materials. We want a situation where the Government can zero rate all building materials," says Ojijo.
 The special fund he adds would also enable buyers from lower income groups to access property financing at relatively lower costs of mortgages.
 Analysts have severally noted that alternative and cheaper ways of building if adopted can in turn bring down the cost of housing in Kenya and Ojijo says all the players need to come together and explore cheaper building solutions that can in turn lower cost of property.
 "Government needs to come in a drastic way, to prioritize housing for the lower end as a crisis, because it is really a big crisis now with almost three quarters of Nairobians staying in informal settlements," says Ojijo.