Kenyan Government Seeks Partnerships with 35 Private Sector Players to Develop On Million Low Cost Housing Units

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Kenya’s government plans to partner with 35 private sector players in the country’s real estate industry to develop one million affordable houses by 2023

The State has also approved a number of facilitative policies. In order to attract private sector investment in building housing for low income families, the government has rolled out incentives such as reduction of corporate tax and removal of levies charged by the National Construction Authority (NCA) and National Environment Management Authority (NEMA), two of the country’s real estate sector regulators.

According to a report by investment services company, Fusion Capital, Kenya faces an annual housing deficit of around 200,000 units.

In an effort to reduce this deficit the recently elected Kenyan government has decided to pay special attention to housing along with three other areas. The government announced an affordable housing plan worth Ksh2.6 trillion, with a target of constructing one million houses within the next 5 years.

“Majority of the construction projects in Kenya encounter more cost and time than expected; however, as most of these are high-end projects targeting people with higher incomes, the selling price of the units are adjusted such that it makes up for the additional cost and time incurred on the project,” said a team of researchers from Fusion Capital.

“Since even a little increase in sale price can impact the decision of a buyer of low cost housing units, the freedom of price adjustment is unavailable for these developments. Due to the existence of these cost and time overruns and unavailability of an opportunity to recover the additional spend, developers find it risky to take part in such projects,” they added.

The analysts stated that Kenya’s private sector can play a significant role in facilitating financing needs, technology needs and efficient delivery of the project.

They have argued that innovations on these fronts can help in reduction of construction cost, maximizing returns for developers as a result.

“A transparent management and clear investment structure can attract private investment,” they said.

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