NHC to construct 4,000 houses with private developer

The National Housing Corporation (NHC) plans to construct at least 4,000 houses for sale in a deal with a private contractor, offering a fresh opportunity to Kenyans who want to buy homes.

In what could prompt price re-alignments in Kenya’s real estate sector, NHC and Sahal Construction will sell the units to be developed on Mombasa Road at between Sh2.7 million and Sh3.7 million.

Analysts billed the project as among the biggest schemes in Kenya, whose pricing is among the lowest in the market, coming at a time when prices are skyrocketing due to a huge demand for units.

Similar houses, in Kileleshwa, Langata and Lavington are estimated to be valued at above Sh6 million.

The housing project in Mavoko which is estimated to cost at least Sh12 billion, will comprise two and three bedroom units and is expected to house 20,000 people.

“This being the single largest housing project, it is expected to trigger price changes with the potential of lowering the prices which as a government we are pushing to boost house ownership,” said Housing Minister Soita Shitanda.

“For years, the huge supply-demand gap, speculative practices, a tedious procurement process and archaic building code have meant high costs of housing, challenges we hope to address, ” said Mr Shitanda.

A Hass Property Index released last week that sought to analyse sector trends covering the period up to the end of the first half of the year indicates residential houses have appreciated by as much as 120 per cent in Kenya since 2005.

Real estate analysts see further rises in property prices.

New demand is likely to be driven by a growing optimism in the market amongst consumers rather than real development in the housing sector.

This is premised on the fact that the middle class has better incomes and more opportunities to own homes rather than pay rent.

The drive to increase supply of houses has pushed the NHC to adopt innovative solutions such as partnerships, use of turnkey projects and tenant purchase schemes.

“In our effort to increase supply we have decided to use a number of options such as partnership with land owners, financiers and developers to bring more units to the market,” said James Ruitha, the NHC managing director.

Mr Dakane Ali, the managing director of Sahal Construction, said the housing project will include construction of a shopping centre, school facilities and a medical centre for use by the residents.

With the cost of power rising, the housing project intends to use solar energy for heating and street lighting, said Mr Ali.

According to Mr Ruitha the housing project is the second project to be executed on the basis of partnership, the first being the Kileleshwa housing unit where 105 units were put up with NHC financing 20 per cent of the scheme.

“Two more such projects are also planned for Thika and Donholm,” said Mr Ruitha.

NHC is also in the process of engaging developers from Iran who have offered to put up more houses to cater for the growing demand.

Demand for houses

Currently, the demand for houses is at 150,000 units whereas the market can only supply 30,000 units on an annual basis.

Due to the mismatch between demand and supply the prices have been on the rise.

Mr Shitanda sees supply for houses improving with the increase in the number of private public partnerships, in what could further push down the cost of houses.

“NHC is engaging in partnership with various players such as land owners, developers and financiers to ensure that we avail more houses to the market hence ensuring affordability,” said NHC chairman Bosire Ogero.