As the cost of land rises in Nairobi and other town areas, developers and investors are turning away from a single-detached dwelling to high rise apartments. The demand for apartments in Kenya is on a rising trajectory compared to bungalows and maisonettes raising the house prices. A report by the Kenya Bankers Association (KBA) revealed that Kenyans bought more apartments than maisonettes and bungalows in 2018. The earthshaking land price inflation is due to the rapid diminishing of stock of urban space, as developers are increasingly building houses as they seek to increase their returns.
According to the report, the uptake of apartments grew from 64 per cent to 76.3 per cent to beat the uptake of bungalows whose uptake plunged to 12.1 per cent from 37.84 per cent. It also revealed that buyers acquiring maisonettes shied away from as sales plummeted to 11.6 per cent from 35.1 per cent.
The new units being developed in the property market mainly target the middle-end of the market. Cost is the biggest deciding factor in the choice of buyers acquiring property as Kenyans’ preference for apartments is influenced by affordability. The construction cost per unit is lower for developers turning to apartment investment as its demand is rising.
High rise apartments have proved to be the most efficient way to maximize land use in densely populated cities around the world. By constructing multi-unit structures it enables developers to distribute the land costs over the total number of units in the development. It is key for developers to acquire land for construction that has a fair price and is situated in the right location, as the property becomes easier for buyers to acquire. This means the developer can afford to sell the units at more affordable prices.
There has been a sense of taste consistency among buyers. Other factors that buyers carefully consider in choosing a property to purchase besides pricing is the age of the house, number of floors, number of bathrooms, number of bedrooms and the size of the house. Key factors of the overall price movements are influenced by scenic value, controlled development, security, privacy and adequate amenities.
The development of the real estate industry will be favoured by tax incentives, lower mortgage rates, credit rationing by lenders and low-cost houses. The growing appetite for apartments saw the value of approved residential building plans rise by 11.4 per cent in 2016, according to statistics from the Nairobi Directorate of Planning Compliance and Enforcement. Kenya still faces a shortage of housing despite the huge investments in residential developments.
High rise apartments have proved to be the most efficient way to maximise land use.