Gated homes no longer a preserve of the wealthy

It is now common to see middle class estates with new apartments, six-foot brick walls and iron fences encircling the enclaves of luxury homes, electronic gates and 24-hour security guards to keep outsiders away with spotless streets and lush landscaping.

High returns from Kenya’s real estate is making property developers take a liking for gated communities as more people seek secure homes.

That land near your house could soon become the next gated community as demand for property in controlled-development areas soars.

The increase in number of gated communities with tarmac roads, street lighting, play grounds, shopping centres, gyms, schools, laundry areas among other amenities is pushing up demand for houses.

The shift from individual houses standing on private property to communal estates where homes are separated by a fence is gaining ground in towns like Nairobi.

For example, Edenville Estate located along Kiambu Road with 345 units costing Sh10.5 million to Sh14.5 million each were sold out in ten months, a record time for such sale, said Shipmen Bank, a sales executive of property management company Hass Consult that sold the units.

Property developers and housing experts see the preference for gated community as a response to the state of insecurity and the rising cost of putting up a property.

Demand for gated communities is rising among the middle and high income earners whose purchasing power has increased over the years with improved economy.

In the last quarter alone, Kenya has witnessed springing up many gated communities including Migaa, Thika Greens, Tatu City, Kihingo Village and La Nyavu Gardens Karen.

Other recent gated communities include Vipingo Ridge, complete with an 18-hole golf course and a private airstrip. 

“There is a marked demand for housing in gated communities as opposed to individual units. Security considerations are partly the reason and the ease of living in community where some costs of social services are shared,” said Ms Bank.

Property managers said most developers with an average bigger size of land prefer to go the gated community way because it has relatively higher returns.

The rush to build gated homes is fuelling increase in land prices adjacent to the houses as investments like shopping malls come up in the areas to serve the many people.

For example, the area around Tatu City and at the Thika Greens, land prices rose five times when those projects were announced.

“The demand is because there is harmony in controlled development unlike what eventually happened in estates like Buru Buru,” said Daniel Ojijo of property development group Villa Care.

Buru Buru Estate was developed in early 1980s as a controlled development area, but failure to enforce the gated community rules has seen construction of extension houses that has put pressure of social services and infrastructure of the area and downgraded its comfort status.

Some of the rules in gated communities include restriction on expansion, a guard screens visitors at the gate and all visitors have to have authorisation from the tenants.

Rules prohibit parking on slots allocated to other tenants, houses must be painted only certain colours among others.

The popularity of gated communities is on the rise and it is set to increase standards of living of most people in Nairobi, according to developers and housing experts.

“It is generally cheaper to live in gated communities because residents share some of the costs of running the community. It beautifies the city and makes it easy to arrange public services like transport. It’s the way forward,” said Mr Ojijo.

However, there are concerns that the emergence of gated communities is locking out less liquid buyers from acquiring property because they result in rise of prices even around areas that they spring up.

For example, at the Tatu City area around Ruiru, the cost of half an acre rose from Sh1 million to Sh5 million when the project was announced.

At the Thika Green Limited that will also feature a golf course, the cost of plots inside the community and outside it have increased more than three times in less than a year.

“When we bought phase three of this project a year ago, an acre of land was going for Sh1.4 million. Today, the same is going for about Sh4 million,” said Charles Kibiru, the CEO of Thika Green Limited. The company is constructing 800 residential units.

But developers said the resulting rise in cost is a matter of market dynamics because of high demand and there is little that can be done about it.

Gated communities are likely to increase following Treasury’s decision to exempt income from the projects from taxation.

Amendments contained in the Finance Act 2010 that was signed into law on December 24 makes income earned from infrastructure bonds with a maturity of more than three years tax exempt, while also putting companies involved in construction of infrastructure projects in a lower tax bracket.

Martin Kisuu, a partner at financial consultancy firm PKF, said widening of tax exemptions will attract a wider range of infrastructure financing, in addition to the now popular infrastructure bonds.

The most recent gated community, Migaa, was opened last week. It is located in the Kiambu County 20 kilometres from the City Centre.

It is to be built on 774 acres of land. Migaa offers a choice of houses, apartments, cottages, villas, duplexes and studios.

It will have 2,500 homes, an 18-hole golf course, recreational, business, educational and health facilities.

“The gated community is targeting middle level income earners with houses starting from Sh5.7 million,” according to Robert Muchoki, the managing director of Home Afrika Communities, the, the company developing the estate.

Kihingo Village is also a newer entrant. It is located in Kitisuru Nairobi.

It is a high end residential development similar to the gated communities common in North America and South Africa.

Kihingo Village homes will have fiber optic cabling to the house.

Vipingo Ridge a 2,500 acre residential estate located in Mombasa opened its 18-hole championship golf course late last year.

The estate has a game conservancy, beach club, 1.5 kilometre private airstrip, numerous lakes, woodland areas and nature trails.

The management said it has sold 80 per cent of the undeveloped plots in Phase 1.

“Interest has grown in the remaining plots and property prices continue to appreciate in value,” said the company in its newsletter.

Tatu City Renaissance Capital, the Moscow-based investment bank is a Sh200 billion real estate project involving the use of private capital to construct a whole new city of 62,000 residents who will live in a well planned environment of manicured homes, office blocks, shopping malls and industrial parks.

It is so far Kenya’s biggest real estate project located on 1,000 hectares piece of land in Kiambu County.

Half of the project is owned by Renaissance Capital while the remaining shares are held by a number of foreign investors and local partners.