Old homes to be knocked down in city upgrade plan

The government is set to bring down all old estates in Nairobi and put up high rise houses in their place to accommodate more people.

The new units will be constructed in Pangani, Starehe and Parklands in a concept known as regeneration, where old houses are demolished to give way to new construction.

“We have received interest from both local and foreign investors who are willing to put up high rise housing units in these areas, replacing the current single dwelling units,” said Mr Soita Shitanda, the minister for housing.

Sale of the new government houses will also be open to the public.

Real estate developers see the move as likely to push down house prices that have barred many Kenyans from owning decent houses.

“The completion of such a project is set to change the housing price matrix as supply is expected increase,” said Mr Reginald Okumu, a real estate developer with Ark Consulting.

Mr Shitanda, who did not give a timeframe for the project, said they were talking with investors and that the regeneration would cover estates in Nairobi’s Eastlands area which are currently owned by the Nairobi City Council.

“The Chinese Development Bank is going to finance the planned regeneration programme covering Eastlands,” said Mr Shitanda.

The Minister spoke on Tuesday as he inaugurated a new board of the National Housing Corporation (NHC). NHC has undertaken a regeneration programme in Pumwani.

The state agency charged with providing affordable houses in the country is also set to put up more houses to meet the current estimated demand of 150,000 units in urban areas and 30,000 units in the rural areas.

Though NHC has over the years been expected to produce 10,000 units annually, the corporation has only managed to put up 1,300 units in the last seven years.

The dismal performance has been attributed to lack of financial resources as allocation from the government has dwindled over the years.

NHC has also been unable to earn its share of revenue from houses constructed in partnership with local councils across the country.

A protracted battle between NHC and the Nairobi City Council over Madaraka estate flats ended last year with the take over of the houses by NHC.

“We have far recovered over Sh3 billion from various local authorities which owed us over Sh5 billion,” said Mr Bosire Ogero, the NHC chairman.

Mr Ogero said NCC, Thika, Nakuru, Mombasa and Naivasha councils had cleared their arrears but that Kisumu, Meru and Kericho still owe the corporation a total of Sh1.3 billion.

With the low fund allocation and push to meet its target, the corporation has turned to other avenues to raise money, including seeking partnerships with land owners, financial institutions and developers.

“We have received good response from land owners, developers and investors and we intend to meet our target through the expected partnership”.

Capital markets

The corporation is still looking to raise Sh5 billion from the capital markets through a corporate bond.

An initial plan to issue the bond hit a snag when the government backed off from guaranteeing it due to its then poor financial position.

But Mr Shitanda indicated that the government would provide the corporation with the necessary approval as the turnaround strategy has placed it on a strong financial footing—recording a profit in the last three years.

NHC intends to use the bond proceeds to develop land where the owners have expressed interest in joint development.

“The bond proceeds will be used to develop land that we find suitable,” said Mr Darius Kirubai, the corporation’s procurement manager in an earlier interview with Business Daily.

But the prevailing high market prices have damped appetite for uptake.

Developers have blamed the high prices on the high cost of construction input, skyrocketing prices of land for development and an archaic building code that limits the size of housing projects.