Low-income group focused developer Karibu Homes says it expects to complete phase one of its mixed development next month.
The firm is offering 281 units in the first phase of a 1,082-unit project in Athi River off Mombasa Road for sale.
The apartments are priced at between Sh1.6 million and Sh5.25 million in the estate worth Sh3 billion.
One-bedroom units go for Sh1.6 million each, two-bedroom house will be sold at Sh3.23 million while three-bedroom units will cost Sh5.25 million.
Ravi Kohli, Karibu Homes co-founder and managing director, said the prices are based on the principle that rent or monthly mortgage payments should not be more than one third of disposable income.
“We worked backwards and typically the units are targeting a husband and wife whose net salary is Sh40,000,” Mr Kohli told the Business Daily.
Buyers will pay at least Sh17,000 in monthly mortgage payments he added. The estate will also have a commercial centre, a nursery school, basketball courts and other social amenities.
Other partners in the project are co-founders Irfan Keshavjee and Nick Johnson and Indian real-estate developer Dipank Sharma. The mixed development targets low-end of the market which has been neglected by most developers and financiers in favour of the high-end home buyers.
Despite the group targeting mortgage takers, a recent survey by the Kenya Bankers Association, the industry lobby group, found that 68 per cent of home owners build their own houses with little or no debt as opposed to buying due to high home loan payments.
The KBA survey also found 80 per cent of people who desire to own homes do not want to take up mortgages due to high-interest rate and the long-term nature of the loans.
“Additionally, mortgage terms are perceived to take very long before one completely owns the home,” said the report.
Despite the reluctance to borrow, banks and real estate investors are still bullish about the sector due to rapid urbanisation that is creating demand for planned developments.
“With the population and urbanisation expanding at an average of 10 percent and four per cent per year respectively, there is an urgent need for financial institutions to come up with innovative solutions to plug the growing need for housing,” said Barclays Bank CEO Jeremy Awori.
The bank last week launched a mortgage centre, a one-stop shop linking customers with developers, architects and other players in the real-estate chain.