Markets & Finance

Karen leads in new projects as value of building plans drops

houses

Houses under construction in Nairobi. Photo/FILE

The value of approved building permits in Nairobi dropped by nearly a third in the first quarter of this year to Sh26.9 billion, a Kenya Property Developers Association (KPDA) report shows.

It shows building plans were approved for projects valued at Sh38.9 billion in the first quarter of 2013.

“A total of 530 planning applications were decided during the period. 11.9 per cent of the total number of buildings permitted/approved was concentrated in Karen, 7.4 per cent in the Embakasi area. 5.8 per cent of the permits approved were in Industrial Area and 5.7 per cent in Westlands,” said KPDA .

Karen received the most application approvals in each quarter since the beginning of 2013 with 305 for the one year period.

The bulk of approved buildings, totalling 418, were in the domestic class that comprises domestic buildings, commercial developments and offices.

Public Class buildings that include religious buildings, social halls, libraries and schools had 77 approvals, while there were 35 approvals for the warehouse class of buildings (factories, industries and godowns) .

The report used standardised data submitted to Nairobi City County, showing information on applications made and approved, type and value, and revenue accrued from the approvals.

The fourth quarter of 2013 saw the highest number of approvals in the past one year, with 858 approvals of property worth Sh43 billion.

However, a 2013 survey done by KPDA and Hass Consult revealed that Embakasi had the most planning applications at 1,250.

READ: Embakasi leads in property demand

According to Hass Consult property development director Farhana Hassanali, the interest in Embakasi was driven by demand for homes from the middle class and a conducive zoning policy, meaning developers can build more units on one plot.

In Karen, the development is because of availability of land. Kilimani, Kileleshwa and South “B” had over 750 planning applications each in 2013, especially from developers of apartment blocks following the rezoning of the area to multiple-dwelling units.

In terms of approvals, these areas each have less than five per cent of the total approvals, with the property development activity there likely to be affected by a reduction of available land.

The trends in approvals may yet shift once the city puts in place its new master plan, which will alter the property and development scene in some of Nairobi’s most densely populated areas.

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As part of the plan, Eastlands which consists of many council estates will be turned into a mini-city of 650,000 residents with better housing and commercial use of the space through a public private partnership plan.

The public component will comprise social housing projects and infrastructure development.

The private sector is expected to provide at least 80,000 commercial housing units, with 20 per cent of its space allocation set aside for light scale industrial and business parks.

Property developers have, however, pointed at increased land rates and construction permit fees as a possible disincentive to development.

Following the review of fees by City Hall, construction permit fees have risen from 0.001 per cent to 0.006 per cent of the cost of construction to 1.25 per cent , a multiple of between 200 and 1,250 times.

This is reflected in the rise in permit approval revenue by the county government to Sh181 million in the first three months of 2014, compared to Sh44.5 million in a similar period last year when there were actually more physical approvals.