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Housing Boom, Techno Cities Gradually Changing Nairobi’s Skyline

Housing Boom, Techno Cities Gradually Changing Nairobi’s Skyline

A boom in real estate investment has seen numerous housing projects coming up in Kenya over the past couple of years.

Some investors have now moved into the development of cities – huge housing developments containing all that a resident could possibly need. The concept is one that Kenyans eagerly await to become a reality.

Many of the housing developments now being put up include social amenities and auxiliary services such as malls, schools and golf courses.

Previously, the few malls available targeted the high-end segment of the population. Now, there are not only more malls in the capital Nairobi, they are slowly spreading throughout the country. The major contributors of this development are chain supermarkets such as Nakumatt, which own several of these developments.

Two proposed cities, Tatu and Konza, have focused on technological advancement. The cities are intended to become a showcase of innovation in the area of information, communication and technology.

There is concern, however, that the proximity of these model cities to the capital is leading to uneven development of the country. Tatu City, where construction began earlier this year, is only 22 kilometers from Nairobi city center. Konza City, which will be built on Mombasa road, is 60 kilometers away.

Xavier Nanchengwa of real estate company BuyRentKenya says that the real estate boom is spreading throughout the country in both commercial and residential areas. Soon, he predicts, rural areas will also start to experience this boom, especially now that the country has been divided into counties with a regional focus toward development.


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“The real estate industry is booming and it is worth factoring it in any investment strategy,” Nanchengwa said.

Over the past five years, the industry has grown by over 300 percent. Further proof of this is the listing of Home Afrika on the Nairobi Securities Exchange. Home Afrika is a local real estate firm.

Improvement of roads is one factor contributing to the rapid development of real estate. An increase in real estate investment has been noted in areas where the government has expressed interest in developing graded roads and other infrastructure.

On the new, ultramodern Nairobi-Thika Superhighway, real estate developers have been busy putting up imposing apartments and other developments.

Frenzied road construction has been witnessed around the country over the past few years. Numerous huge projects are underway, mainly spearheaded by Chinese companies.

In Nairobi, a number of bypasses are being built to divert traffic and decongest the city center. Prices of land are quickly rising in the areas near these roads, with speculators and housing firms positioning themselves to benefit.

A good road network has made the capital city more accessible and people need not live near the city to enjoy the amenities it offers.

The quality of housing estates being put up has gone up, and so has the pricing.
The expansion and opening of new institutions of higher education has also served to spur further investments. The government wants to open a university in every county.

In the last few months of his tenure, former President Mwai Kibaki went on a charter-granting spree to upgrade various institutions of higher learning into universities. These universities have accelerated the growth of small towns nearby.

With political instability in a number of countries neighboring Kenya, its real estate industry has benefited from the influx of wealthy refugees and aid workers.

Eastleigh estate in Nairobi, for example, is home to wealthy Somali refugees who have invested there. Aid organizations operating in Somalia and even South Sudan have regional offices in Nairobi.

Because of its geopolitical importance, Kenya is often picked by international organizations for their regional headquarters. The United Nations Office is located at Gigiri on the outskirts of Nairobi.

However, the lengthy and tedious process of obtaining permits to put up buildings is discouraging investors. This is one of the factors pushing up prices of housing units.

Another factor discouraging investors is the high cost of construction materials. This pushes up prices, often beyond the reach of would-be buyers.

Mortgage rates offered by banks are high. Barclays is the only bank offering mortgages at a fixed rate of 15.5 percent over 15 years. Other banks offer mortgages at variable interest rates.

While road building is heavy in some areas, the poor state of infrastructure in many places is cause for concern. Apart from the main highways, feeder roads are generally in a deplorable state. This raises the cost of transport since moving materials to building sites is an uphill task.

Some parts of the country have not benefited from the real estate boom as much as Nairobi and other major urban centers. Even with the discovery of oil in Turkana and recent discoveries of rare mineral deposits in Kwale, there has not been a word about putting up urban infrastructure.

“People in rural Kenya have waited a bit too long to have a taste of urbanization,” said Charity Vihenda, a finance student at Strathmore University in Nairobi. “What happens to them? There needs to be equity in the development of infrastructure.”