Ms Sakina Hassanali, Hass Consult head of marketing and research. PHOTO.
Increasing demand for houses in the middle class segment is forcing developers to go for a mix of both high-end and middle level apartments to spread the risks.
Developers are increasing the supply of middle level houses, which has remained low, with their preference previously being for high-end houses with huge returns.
Most high-end houses go for over Sh10 million, but a slow-down in their uptake has forced some developers to segment the market with a focus on the middle class.
Experts say the demand for houses by the middle class and the lower end has been increasing, although buyers are handicapped by limited options for financing due to the high cost of mortgages.
“The market continues to be handicapped by lack of access to mortgages for middle level and lower level buyers,” said the head of marketing for Hassconsult, Ms Sakina Hassanali, early this year.
TRACKS TRENDS IN KENYA
Hassconsult Ltd tracks property market trends in Kenya. Ms Hassanali said the greatest challenge is that the property market is controlled by cash-purchase deals, with only a few mortgage takers.
In its latest report released in October, Hassconsult said the easing of interest rates provided hope for home hunters, majority of whom are in the middle class segment.
“The middle class are those who borrow between Sh3 million to Sh10 million. Most of these people want houses of below Sh5 million but the market has not adequately supplied them,” said the Mortgage Company’s chief executive officer, Ms Carole Kariuki.
But developers say they have to contend with high costs of infrastructure that include access roads, solar water heating systems, streetlights, stand-by generators, electric perimeter fencing and landscaping, to deliver houses to the middle class.
Kenya Property Developers Association and property firm HassConsult, in a joint report earlier in the year, noted that in 2013, only 15,000 houses were planned and approved for building, against a demand for 200,000 housing units a year.
This, developers say, is as a result of the high cost of land and infrastructure.