Residential Projects

Kenyan Firms Smell Big Money in Low-Cost Housing Market

Investors are rolling out dozens of projects targeting middle income and lower income earners.

Updated on

May 26, 2016

A bungalow at Kisaju View Park estate. PHOTO | COURTESY

As more people struggle to acquire homes, property developers are increasingly shifting their focus to the low-income housing market, which was previously perceived as unprofitable.

The trend, which comes in the wake of falling demand for high-end homes, has seen investors rolling out affordable housing projects targeting middle- and lower-income earners.

Companies like Shelter Afrique, Urbanis Africa, Karibu Homes, HF Group, and KCB have recognized the potential in the low-end market, with homes priced as low as Sh1.6 million.

Shelter Afrique, which is seeking partners to build low-cost homes, recently stated that the top-tier market is saturated. Pan African mortgage firm advised investors to focus on opportunities in peri-urban areas due to the large populations of low-income earners.

“The impression is that the market is saturated, and that is only true for the top tier of the market, we still have a long way to go to providing affordable housing.

“Not just affordable as well, but quality, and in achieving that, the market narrows when you need to find able developers, that is why this is a welcome sign,” said the firm’s managing director James Mugerwa.

Last year, Shelter Afrique embarked on several developments that will add over 1,000 homes in various parts of the country, some going for Sh1.6 million.

Urbanis Africa, the firm behind the famous Kisaju homes, is already reaping the benefit of being among the first investors to service the low-income market.

In 2012, the company launched phase one of the Kisaju project, which involved the construction of 950 low-cost housing units – with a two-bedroom house going for as low as Sh1.5 million, a price that is arguably affordable for many Kenyans.

The company has since launched more phases of the project and it is understood that the project has been a resounding success.

Karibu Homes is bullish on the mid and lower-income segments. The company is now building 1,080 apartments in Athi River, some going for Sh1.6 million.

This makes it possible for an individual with a net monthly salary of as low as Sh40,000 to acquire a house for his family.

HF recently said it was seeking to accelerate the adoption of appropriate technology for use in low-cost projects for middle and low-income earners.

KCB last year excited the market when it announced that it was forming an independent construction firm that would build 10,000 low-cost houses for the low-income market.

The firm aims to use new technology to build homes priced between Sh1 million and Sh3 million. It is in talks with Brazilian and Mexican investors for financing.

High prices of land, coupled with double-digit interest rates on bank loans are often cited as the major hindrances to the development of affordable housing.