Kenyan firms smell big money in low-cost housing market

As more people struggle to buy or even rent a home, discerning property developers are increasingly shifting their focus to the under-served 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 dozens of affordable housing projects targeting middle income and lower income earners.

Pan African mortgage firm Shelter Afrique, Urbanis Africa, Karibu Homes, HF Group and KCB are just some of the companies that have seen potential in the low-end market – with homes going for as little as Sh1.6 million.

Shelter Afrique, which is currently scouting for partners to develop low cost homes in the country, recently said that the top-tier market is already saturated and that investors should now focus on the many opportunities that exist in the peri-urban areas due to huge 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 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.

READ: Do you earn Sh25,000/month? You now qualify for a mortgage

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 Group recently said it was seeking to accelerate adoption of appropriate technology for use in low-cost projects for middle and low income earners – who form the bulk of the country’s population.

KCB Group 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.

READ: Bamburi stirs up market with Sh500,000 homes

The firm said it hoped to ride on new technology to build homes priced at Sh1 million to Sh3 million.

KCB is reportedly in talks with Brazilian and Mexican investors who are expected to finance the project.

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.

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