Kenya Economic Update 2023: Real Estate

Low Cost Housing Project

The 6,704 affordable housing units located on 22.14 acre parcels of land in Ziwani, Starehe, were officially broken ground under the watch of President William Ruto. Through a Public-Private Partnership (PPP) arrangement in which the Government will provide the land, GulfCap Africa Limited is expected to fund the Kshs 13.0 bn project. 370 housing units were supposed to be included in the project, per the original design plan. A Presidential directive, however, increased the number of units to be delivered to 6,704 units, with prices beginning at Kshs 1.2 mn. 2,000 of the 6,704 units will go toward a social housing program that aims to improve informal settlements by reserving the housing only for low-income residents. Residential housing units will be included in the project, along with social amenities like a playground for kids, sports courts, a gym, a swimming pool, green areas, outdoor recreation facilities, food courts, community centers, and an Early Childhood Development (ECD) center. GulfCap Africa Limited will be in charge of leading the project’s construction, which is expected to be completed in February 2026 after being carried out in five phases over a five-year period. The developer also completed Phase One of the Buxton Affordable Housing Project in Mombasa, which included 584 units. The exact information for the housing units has not yet been released in light of the design changes.

The government’s dedication to achieving the affordable housing agenda by supporting the construction of 200,000 units annually is demonstrated by the launch of the Ziwani Starehe project. Other projects for affordable housing started by the Ruto administration include Kings Boma Estate in Ruiru, Shauri Moyo, Mukuru kwa Njenga, Kibera Soweto B, and Homa Bay. In October 2022, the government also gave the go-ahead for the Kings Serenity Project in Ongata Rongai. Other projects for affordable housing that are in the works are listed below.

  1. Pangani Affordable Housing Program  – 1,562 units (Developer National Government and Tecnofin Kenya Limited)
  2. River Estate Affordable Housing Program in Ngara – 2,720 units (Developer: National Government and Erdemann Property Limited)
  3. Ziwani Starehe Affordable Housing Project in Ngara – 6,704 units (Developer: National Government and GulfCap Africa Limited)
  4. Park Road Affordable Housing Program  – Nagara – 1,370 units (Developer: National Housing Corporation)
  5. Mukuru Affordable Housing Program – Mukuru kwa Njenga, Enterprise Road – 15,000 units (Developer: National Housing Corporation)
  6. Mavoko Affordable Housing Project in Syokimau, Machakos County – 5,360 units (Developer: National Government and Epco Builders)
  7. NHC Stoni Athi View (Economy Block-Rental) in Athi River, Machakos County – 50 units (Developer: National Housing Corporation)
  8. NHC Stoni Athi View in Athi River, Machakos County – 120 units (Developer: National Housing Corporation)
  9. Mariguini Informal Settlement in Starehe, Nairobi County – 2,600 units (Developer: National Government)
  10. Kibera Soweto East Zone B – Kibera Nairobi County – 3,000 units (Developer: Natinal Government)
  11. Starehe Affordable Housingg Project in Starehe Nairobi County – 3,000 units (Developer: National Government and Tecnofin Kenya Limited)
  12. Shauri Moyo A Affordable Housing Units – 2,731 units (Developer: National Government and Epco Builders)
  13. Clay City Project – 1,800 units (Developer: Housing Finance Development and Investment and Clay Works Limited)
  14. Bachelors Jevanjee Estate – 1,050 units (Developer: National Government and Kings Developers Limited)

Total of 47,787 units under the Low Cost Housing Programme. The project is expected to; i) elevate the living standards of residents through providing affordable, quality, descent housing and social amenities, ii) improve the livelihood of surrounding residents through the creation of an estimated 10,000 jobs and employment opportunities both directly and indirectly, iii) promote economic growth by supporting the local manufacturing sector through extending tenders worth Kshs 0.5 bn to local Micro Small Medium Enterprises (MSMEs) in a plan to source building materials such as doors and windows locally, iv) promote inclusion of women in the business sector as approximately 50.0% of tenders will be extended to women, v) assist curb the existing housing deficit currently standing at 80.0%, and, vi) boost home ownership rates which have remained low especially in urban areas at 22.0%. The developer is also expected to upgrade Ziwani dispensary and a local school. The graph below highlights home ownership rates in different African countries;

We expect to see the launch and completion of more affordable housing projects as the year progresses owing to the traction gained by the AHP, and more developers enter into Public-Private Partnership (PPPs) agreements with both the national and county governments in efforts to realize the affordable housing agenda.

In the Retail Sector Tuskys Supermarket announced the closure of Tuskys Karasha branch located along Kenyatta Avenue in the Central Business District (CBD), Nairobi. This has brought down the number of the retailers operating outlets countrywide to five; Tuskys Imara, Tuskys Athi River where its headquarters are located, Tuskys Buruburu, Tuskys Ongata Rongai, and Tuskys Oltalet Narok located in Oltalet Mall. Notably, Tuskys Imara branch along Tom Mboya is the last remaining of the retailer’s outlets in the CBD. Tuskys cited poor performance occasioned by reduced footfall and operations owing to the tough micro-economic environment as main factors that influenced its decision to shut down the branch. In light of the retailers exit, we expect the existing oversupply of retail spaces in the Nairobi Metropolitan Area (NMA) standing at approximately 3.0 mn SQFT to widen further.

Tuskys has been struggling to revive its supermarket chain since February 2020 when the its liquidation issues first surfaced, forcing the retailer to close a majority of its branches and joined the list of local retailers who have exited the market such as Nakumatt, Uchumi, Game Stores, Shoprite, and Choppies. We expect that; i) the surging inflation driving up costs of businesses and curtailing consumer purchasing power, ii) the fast paced growth of e-commerce, and, iii) the existing oversupply of retail space standing at approximately 3.0 mn SQFT in the NMA retail sector and 1.7 mn SQFT in the non-NMA regions, will weigh down performance of the Kenyan retail sector. However, we anticipate that the ongoing aggressive expansion drive by both local and international retailers such as Naivas, Quickmart, and Carrefour will help cushion the sector’s performance.

4 Bedroom + DSQ Mansion in Muthaiga est. FOR SALE – Nanyuki

About Post Author

Leave a Reply

Your email address will not be published. Required fields are marked *