When Gated Estate Costs Are Too High

HF Development and Investment Limited Executive director James Karanja
HF Development and Investment Limited Executive director James Karanja (right) speaks during a handover ceremony to new home owners at the housing development project at Komarock Heights Phase 1 on August 10, 2018. PHOTO | SALATON NJAU | NMG 

Peter Kanyoro found out about a monthly service charge when he walked into his Sh6.7 million newly-bought house.

“It was a surprise to me since I had struggled to raise the principal amount for outright purchase of the apartment. Now every month I have to pay Sh5,000 for maintenance of gardens, swimming pool and 24-hour manning of the gate,” he said.

While many gated communities continue to attract buyers and are highly preferred by Kenyans, some fail to disclose value-add costs upfront when advertising the projects.

Banking and housing units developer, HFDI which has executed various projects across Kenya says buyers should be informed before signing the purchase deal on the overhead costs that will arise.

Most developers form a company for each gated community and initially run it during the sale window but hand over ownership of the company to new owners.

“No one wants their houses’ value to depreciate due to neglect of essential amenities such as gardens, swimming pools, security management and availability of shops for essential items and services,” said James Karanja, the HFDI executive director.

Additional value

Rama Homes Limited sales manager Adrash Hussein said buyers of their housing units automatically become shareholders of the project management company.

“The house owners determine how they want the project maintained and this requires money that is raised from rent as well as from facilities such as restaurants, gym and hiring of community hall as well as contributions of residents,” he said.

Mr Kanyoro said costs a full-time lifeguard at the facility’s swimming pool as well as security guards manning the gates add to the woes of new home buyers.

A recent research by the American Real Estate Society (ARES) warns that uptake of units within gated communities could continue falling if maintenance costs are high.

“Gated communities sell at a premium relative to comparable homes in non-gated communities due to actual or perceived benefits associated with additional privacy, homeowner associations’ tighter controls on maintenance, home design and the added assurances against crime and other undesirable activities,” said Ken Johnson.

But in Kenya, gated communities continue being attractive due to their know-your-neighbour philosophy that helps build closely-knit communities.

Children have a secure environment to live in as well as enjoy protection from and to school, grocery and service shops located within the facilities at anytime of the day or night.

Gated communities, said Mahiga Homes chief executive Patrick Muchoki, also provide residents with an opportunity for modern living where residents could jog as well as go to the gym regularly as well as occasional swimming within their protected communities.

“The tenants determine the services they require and hire professionals to provide them at a fee. This is about defining lifestyles that portends the need for residents to keep fit as well as manage the environment they bring up their children,” he said.

The US study found that while the amenities such as clubhouses, community swimming pools, tennis courts, schools made gated communities attractive, there was need to factor effect of maintenance costs or else risk losing their allure to buyers.

“Additional maintenance costs often outweigh their benefits and it appears that while a gate has value, additional neighbourhood amenities do not always provide additional value,” it said.

It recommended that buyers be fully briefed on overhead costs to allay discontent arising from lack of information.

“From the perspective of both the buyer and the seller, this information should help each to better price property. A good understanding of what adds value and what does not should help create increased marketability of gated homes,” adds Dr Mark Sunderman who also participated in writing the report.