Prices of houses in Kenya are on steep rise as the real
estate sector develops rapidly and developers seek higher returns on their
investments.
The cost of two, three and four bedroom houses, which are popular with most
Kenyan families, have skyrocketed in the past months.Data from various real
estate and
housing development firms indicate that a two bedroom house in the East
African nation is going for between 44,048 U.S. dollars and 90,000 dollars.
About three years ago, a
two bedroom house in the East African nation would go for between 35,714
dollars and 60,000 dollars.While prices are rapidly rising across Kenya as more
developers join
the sector, it is in the capital that prices have increased sharply ensuring
that houses remain out of reach of the average working Kenyan.
In Nairobi, the price of a two bedroom house ranges averagely between 44,048
dollars and 90,000 dollars. However, the prices depend on the location of the
houses,
whether in low, middle or high income areas. In high income areas, prices of
a two bedroom house climb as high as 95,238 dollars. Similarly, for three
bedroom houses, prices
vary from 78,350 dollars for those located in low-income and outside Nairobi
and 140,285 dollars in high-end suburbs. Things are not different with 4
bedroom apartments
where prices vary between 117,261 dollars and 267,095 dollars in exclusive
suburbs of the capital.
Interestingly, most of the houses are not standalone units with own
compounds but high-rise apartments.This means developers are maximally using
land as they seek to
reap big from their investments. On a quarter an acre piece of land, for
instance, most developers are constructing two blocks of three storey
buildings, each comprising of
nine houses. The trend has gained currency in recent years as land becomes
scarce and prices rise in the capital. Some years back, recalled retired
government worker
Benjamin Oworo, most developers would go for standalone houses, ensuring
families have own compounds. "Then, developers would buy huge tracts of
land and built
several bungalows and maisonettes comprising of two, three and four bedroom
houses," Oworo, who owns two three bedroom houses in Komarock estate
recounted on
Tuesday.
The houses, according to Oworo used to be sold at between 29, 761 dollars
and 71,428 dollars. "This made sense because one would have own compound,
giving them room
to build smaller houses on the plot or extend their houses," he
recalled. But, according to the retired accountant, things have changed greatly
in the housing sector in the
capital. "Prices of houses have doubled and standalone houses are no
longer favoured by developers. They are building apartments, which they are
selling highly yet you
cannot even extend the houses when you want," he said.
Oworo bought two houses. One under his name and the other he co- owns with
his wife. Both of the houses he bought on mortgage and successfully completed
paying, a
feat that is currently impossible for many home seekers in the East African
due to high credit rate. "I bought the two houses at 65,385 dollars.Those
who were paying cash got
better deals. Things were better then. There were still some controls and not
many people had entered the sector," he said, noting that prices of most
houses currently are
blown up.
The 57-year-old said his two houses currently will fetch about 86,309
dollars each. "If I decide to sell them, I would make huge profits because
they are standalone houses,
which people want but developers are not building," he said. Antony
Kuyo of Avent Property Agents in Nairobi's eastlands area blamed the high cost
of houses on rise in
prices of land and building materials. In the capital, a quarter piece of
land is going at between 14,285 dollars and 47,619 dollars.Prices depend on the
neighbourhood the
land is located, with those in high-income areas selling expensively.
"The high prices of land, which keep on appreciating, push up the prices of
houses since a developer would
want to make return on investment," he said.
The property agent noted that high land prices have made developers switch
to apartments, which offer better returns. "If you build apartments, for
instance, on an acre
piece of land, you will get better returns than building standalone
houses," he said.Kuyo noted that prices of building materials namely
cement, roofing materials and interior
decor have equally increased."You cannot build a house today and fail
to finish its floors with tiles and hope people will buy. They will not. This
is what has also increased
prices of houses. Developers will give people what they want and charge
accordingly," said Kuyo.
However, he acknowledged that some developers exaggerate prices of houses
making them unaffordable."If one sells a 4 bedroom house at 14,285 dollars
in middle- income
suburbs, as I see some people do, this is extremely high. Such a house
should go for a maximum of 11,306 dollars, which is reasonable," he
said.Kenya's real estate sector has
grown over the years into a multi-billion dollar industry, with the number
of players increasing faster.The sector is one of the drivers of the East
African nation's economy, a
fact that was recently recognised by Kenya Revenue Authority when it ordered
all landlords to start paying tax.
Growth of the sector has boosted production of cement and roofing material,
among other things related to building industry. The latest Kenya National
Bureau of Statistics
report on the economy indicated that the East African nation consumes an
average of 350,000 metric tonnes of cement each month, up from 250,000 metric
tonnes in 2010.
Similarly, City Council of Nairobi approves an average 12,000 residential
and non-residential building plans each month. (Xinhua)
