Just a month after the Hass Consult real estate index released its second quarter report in which the cost of building and acquiring homes hit an all-time high, developers are now adopting new tactics to build affordable homes in Nairobi.
Inflation and losses from the weakening shilling pushed construction costs up, forcing developers to devise new ways to meet the country’s rapidly rising demand for affordable housing.
“Inflationary pressures on building materials will drive up prices of newer homes in areas supported by local demand, while new construction in competitive surrendered markets will cause developers to lose margins and therefore either turn to product value engineering or exit the market entirely,” said Sakina. Hassanali, Head of Development Advice and Research at HassConsult.
NMS Homes Under Construction in a Nairobi Estate
Community Land Trust
The Community Land Trust is where the cost of a home is separated from that of land. In this case, developers advise a community to agree on how to set up properties and then share the proceeds.
The community members initially raise money from a combination of local governments, philanthropic organizations, individuals and bank loans to purchase one or more properties.
The trust then retains ownership of the land, while the homeowner pays the cost of construction, plus a nominal leasehold fee for the use of the land. When the house is sold, the land trust sets limits on pricing so that it can be affordable for the next buyer.
Some developers building apartments and houses on various estates in Nairobi are entering into joint ventures to meet the demand for affordable housing.
They make agreements with land owners to build homes and then work out a division plan through legal proceedings.
So far, this approach has been used to locate more than 200 units near the Garden City estate.
Using Simple Designs
Some designers are now going for simple house structures and designs. Developers opt for simple floors and avoid complicated roofs.
Instead of building individual units, real estate agents are now going for multi-storey houses. This saves on building usually expensive foundations.
It also saves on roofing costs.
An apartment building in Nairobi.
Developers also recycle some materials used in construction to save costs. Some even prefer to use second-hand building materials.
Instead of buying ladders, developers encourage the use of improvised structures.
“When building you do not have to purchase all the necessary materials. A cheap and more economical way is to recycle. You can also go for second-hand building materials,” says a broker.
Buying purchased and bounded plots of land
Brokers prefer to buy land that has already been maintained. This helps them save on the cost of public services.
This also helps reduce burdens associated with excavating, clearing shrubs, or repairing extended drainage.