Market News

Nairobi land prices take up 60pc of construction cost


Land prices in Nairobi’s surrounding counties of Juja, Kiserian, Syokimau, Tigoni, and Ruiru recorded the highest jump among suburbs last year. PHOTO | ARTIST IMPRESSION

Land prices in Nairobi constitute up to 60 percent of the total cost of a housing unit in a move that looks set to derail efforts by the state to speed up the development of affordable housing units, Shelter Afrique has said.

The housing financier said on Monday that the Kenyan government should address the high cost of land and building material, which they said, would worsen the provision of affordable housing in the country.

The firm said that studies in the market have revealed that land prices should constitute between 10 to 15 percent of the total cost of a housing unit for it to be affordable, but this is not the case in many African countries including Kenya.

“In Kenya, for instance, the cost of land makes up between 40 percent and 60 percent of the total cost of a housing unit, like the case with Nairobi which is the most expensive in the entire continent of Africa,” said the firm's acting managing director and chief financial officer Kingsley Muwowo.

“How do you deliver affordable housing when you’ve got the most expensive land? So if we don’t address the issues around land we will not be able to effectively tackle the issue of affordable housing.”

Property prices in Nairobi and land costs in satellite towns around the capital have risen to new highs on the back of renewed demand from buyers who had slowed down acquisitions at the peak of Covid-19 economic hardships.

The price of an acre in Kiserian for instance rose 16.6 percent to Sh9.4 million in the year to March from Sh8.06 million the year before, according to data by real estate firm HassConsult.

Apart from the high cost of land in Nairobi, Mr Muwowo also decried the rising construction costs.

In Kenya, the prices of steel bars and nails have risen by between 80 per cent to 90 per cent and 13 per cent to 43 per cent, respectively, in the past few months.

[email protected]