Residential Projects

How Kenya Plans to Deliver Homes for Sh500,000

The government is betting of new technologies to lower construction costs.

Updated on

February 2, 2018

The Kenyan government has laid out an elaborate low-cost housing strategy that is likely to revolutionise the local real estate sector by bringing into the market some new residential houses for as little as Sh500,000.

According to Transport, Urban Infrastructure and Housing Cabinet Secretary James Macharia, the State will provide land to investors who will then take advantage of various building technologies and economies of scale to deliver affordable homes for citizens.

The government has shortlisted 35 companies to undertake a pilot project in Mavoko, Machakos County, which will serve as a prototype for a planned national rollout of an ambitious housing plan that aims to meet the needs of low-income urban workers.

Under the pilot project, a total of 8,000 low-cost two- and three-bedroom houses will be built on a 55-acre parcel of land that has been provided by the government – each of which will be sold to the public for between Sh1 million and Sh1.5 million.

“Some 60 contractors expressed their interest in putting up the houses under an Engineering and Procurement Contract (EPC) that allows them to build and deliver houses to the State.

“We have since shortlisted 35 local and international firms that will be allowed to participate in the tendering process expected to commence shortly,” he said.

Under the EPC model, a contractor funds an entire project and is paid upon completion of the project once the State is satisfied with the quality of the homes.

The project is expected to promote the use of low-cost building technologies that are currently shunned by many Kenyans who view them as inferior compared to traditional brick-and-mortar structures.

A total of Sh2.6 trillion will be spent to build a million low-cost homes across Kenya in the next five years as the country seeks to bridge its national housing gap which now stands at about 1.85 million units.

According to Mr Macharia, some 800,000 houses will be built under the private-public partnership (PPP) model while the remaining 200,000 homes will be built under a social housing scheme – where a unit will be sold for between Sh500,000 and Sh700,000.

Social housing refers to dwellings provided for rent or sale at a fairly low cost by housing associations and local governments. It is typically offered to citizens on extremely low incomes or those with special needs.

Although the actual sizes of the proposed homes are yet to be revealed, the pricing of the state-backed homes is expected to disrupt the ‘low-cost housing” market that is currently dominated by small housing development firms and saccos – whose units are in most cases sold for more than Sh3.5 million.