David Ndii, the chair of the Presidential Council of Economic Advisers, on May 27 showed how slum landlords collectively earn an income of Ksh2.8 billion in rent.
A study published on February 2020 titled ‘Urban transformation and the politics of shelter: Understanding Nairobi's housing markets’ showed how rental incomes in slums like Mukuru competes with rental incomes in high-end areas like Kilimani.
“A one-acre Runda and Muthaiga property will set you back Sh200m and rent for Ksh250,000 per month at best. We are talking here of a rental yield of 80 per cent in Mukuru vis-a-vis 2 per cent in Muthaiga.
“Rental yields in the sprawling high-density informal tenements such as Pipeline, Umoja, Githurai are in the 20 per cent to 30 per cent (range), compared to between 5 per cent and 8 per cent in upmarket areas such as Westlands and Kilimani,” Ndii noted.
Basing their research on 2018 Kenya National Bureau of Statistics (KNBS) data, the researchers pointed to a multi-billion shilling real estate business in the single-room houses market.
“Assuming an average rent of Ksh3,000 per month and that 69.5 per cent of households reside in single rooms out of the city’s 1,487,667 households, the cumulative rental income from these units is around Ksh3.1 billion.
“Thus, the total annual income from rental units is approximately Ksh37.2 billion, which clearly demonstrates that this submarket, beyond providing shelter, is also highly significant to Nairobi’s economy,” the researchers note.
The researchers showed that landlords in Nairobi’s low-income rental housing market can make up to four times more than landlords in middle and high-income housing.
“Notably, the city’s highest densities are found in areas dominated by shacks and tenements.
“However, the main dwelling type remains constant: single-roomed shelter,” stated the researchers.
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The paper was done by Baraka Mwau of the University of Cape Town, Jack Makau of Shack Dwellers International, and Alice Sverdlik of the University of Manchester and can be found on researchgate.net.
“Informal, small-scale contractors are usually hired by structure owners to build shacks.
“In some settlements (e.g. Kibera and Mathare Valley), more experienced contractors are now constructing multi-level shacks (ground floor plus one)," stated the research paper.
Lack of title deeds and proper planning were cited as major reasons for the proliferation of slums.
The researchers recommended the provision of infrastructure and services in satellite towns in order to decongest the city.
President William Ruto is on a charm offensive, rallying Kenyans behind the government's Affordable Housing Plan that would see salaried citizens part with 3 per cent of their monthly earnings.
On May 18, he noted that Kenya would learn from the Singapore housing fund which will lead to a reduction in slums.
