City Hall set to demolish seven colonial-era Nairobi estates

What you need to know:

City Hall signed the first two of seven contracts for the redevelopment that will see ageing county-owned bungalows and residential blocks come down in the next two years.
The Sh54 billion project will see the old houses replaced with 10,200 new apartment units, which the county says will be sold at below market prices.
Construction of the units is expected to begin immediately and will take approximately 24 months to complete.

Hundreds of pre-colonial houses in Nairobi are set to be demolished to pave the way for high-rise residential units. This follows the signing of development contracts between City Hall and private financiers on Tuesday.

City Hall signed the first two of seven contracts for the redevelopment that will see ageing county-owned bungalows and residential blocks come down in the next two years.

The Sh54 billion project will see the old houses replaced with 10,200 new apartment units, which the county says will be sold at below market prices.

Jabavu Village Limited on Tuesday signed a contract for development of 1,470 units of one, two and three-bedroom units in Jevanjee Estate, opposite Kariokor Market, at a cost of Sh9.1 billion.

Sovereign Group Limited also signed a contract for the development of 1,050 one, two and three-bedroom units in Pangani to replace the current two-storey blocks. This will cost Sh7 billion.

Nairobi governor Evans Kidero said the current tenants will be paid relocation compensation during the construction period and will be offered first priority to buy the new units at construction cost.

“A specially designed tenant purchase scheme will be established to assist them in acquiring the houses as they cannot participate in a mortgage market effectively,” said Mr Kidero.

“The houses will be affordable to the majority of urban population. The sale price will be at less than half or probably half of commercial selling prices.” An additional 3,000 market stalls will be part of the seven estates’ redevelopment.

Construction of the units is expected to begin immediately and will take approximately 24 months to complete.

Contracts for reconstruction of all the seven estates have already been awarded out to financiers-- with tenders for the remaining five set to be signed in the following few weeks.

KCB will put in Sh9 billion to build 1,050 units of one, two and three bedrooms at the New Ngara Estate. Stanlib Kenya Limited will spend Sh3.7 billion to put up 1,050 apartment units at Uhuru Estate.

Kiewa Group Limited will spend Sh7 billion to redevelop the Old Ngara Estate, which will have 840 apartment units.

Directline Assurance Limited bagged the award for redeveloping Suna Road Estate at a cost of Sh3.5 billion, with 1,050 units to be built.

The biggest project will be on Ngong Road Estate where a total of 2,520 units will be built by Lordship Africa at a cost of Sh24.2 billion.

“The county will add a marginal mark up to the prices quoted by the partners and offer the units for sale or rental purposes to members of the public,” City Hall said in bidding documents.

Under the joint venture agreement, the county government and the financers will appoint an independent audit firm or bank to handle the financial operations of a project including holding the sectional titles before they are transferred to the end buyers.

“The (private) partner shall be entitled to recover the price that they have quoted in the bid document for each of the units sold while the county will receive a certain percentage marked up on the bidders’ price in such a way to make the houses affordable to the end buyers.”

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If sold at half of market prices, the new units will offer a huge opportunity for city residents keen to own homes, but have been put off by the high market prices.

Data from the Central Bank of Kenya shows the average mortgage size stood at Sh8.3 million, indicating the high cost of residential properties that has locked out a majority of Kenyans from owning homes.

The development could also throw a spanner in the works for commercial developers who face serious competition from the cheaper units.

Currently, three-bedroom apartments in Nairobi are mostly priced upwards of Sh7 million with the cost usually dependent on location, infrastructure and amenities in the area.

The award and signing of the contracts will now see attention turn to contractors picked by the financiers to build the houses.

The projects will offer an opportunity for local contractors who have the capacity for such projects to compete with international rivals.

The redevelopment of the seven estates is the first phase of the county’s demolition of its old houses, with phase two set to add 100,000 units mainly in Eastlands.