Foreigners are clamouring for a piece of the East African housing market, particularly Kenya, if the latest demand figures are anything to go by.
Somaya Joshua, the head of Property Finance Africa at Absa Group, while speaking at the East Africa Property Summit on Wednesday, May 17, indicated that the uptick in foreign investments was driven by housing demand.
Kenya recorded the highest housing demand with respect to its status as East Africa's biggest economy. Its annual demand is pegged at 2 million units per year.
"A couple of things drive the growth uptake, the obvious being the pent-up demand we have witnessed of late.
"I think in Kenya, the housing shortage was about 2 million units by the last count. The crisis may increase over time unless we start to bring the right kind of stock to the market," Joshua explained.
Her sentiments were echoed by Knight Frank Kenya CEO Mark Dunford, who observed that affordable housing was at the centre of the African investment drive, with Kenya leading the way.
Dunford explained that the affordable housing project was central to the real estate industry. Various organisations reportedly determined that the houses range between Ksh2 million and Ksh10 million.
However, investors in the sector, fully backed by the state, must balance their books to ensure they reap a sizeable demand for their investments.
"The affordable housing question is a massive point in Africa. Here in Kenya, we have a large-scale need for it, and I think we are starting by defining what is affordable.
"Organisations have defined affordable housing range between Ksh2 million and Ksh10 million. One of the key issues around that is financing from the developers' perspective," Dunford explained.
The summit came against the backdrop of President William Ruto's promise to deliver 200,000 units annually to meet the ever-expanding deficit.
In his plan, the Head of State envisioned collecting a monthly mortgage of Ksh5,000 from prospective house owners with the goal of owning the units in the long run.
In retrospect, Ruto explained that renting the houses would be more expensive, with a monthly price tag of Ksh15,000.
"We have built a house for Ksh1 million. A good house with a bedroom, sitting room, kitchen, toilet and shower. The mortgage for buying that house is Ksh5,000 per month. It is the only programme where rent will be higher than the mortgage.
"If you were to rent that flat, you would probably pay Ksh15,000 or Ksh20,000, but it is going to cost paying mortgage Ksh5,000. A two bedroom, Ksh10,000 for the mortgage," the Head of State explained in September 2022, shortly before his swearing-in.
Since taking the reins, however, Ruto promised to provide land to developers at cheap prices to construct the units, most of which will assume a high-rise model.
The government is also pushing to enact a 3 percent housing deduction, with employers and employees contributing an equal amount to facilitate government's Housing Fund.
