Despite oversupply in the high end of the real estate market, Kenya is currently facing a shortfall in the middle-income housing in the city. However, this deficit is expected to ease this year all thanks to the increased supply of affordable units in the market.
According to a research conducted by Mi Vida (a real estate affiliate of Actis and India’s largest real estate conglomerate Shapoorji Pallonji), the population of the middle class is also expected to be 5.6% to 250,000 by the year 2024. The research also showed that annually, the real estate industry provides 3, 000 households affordable by the middle-income class, leaving a huge gap in supply. Mi Vida hopes to close this gap by developing a 12bn project that is said to provide quality and affordable housing to this group. The Company has also a sales office with show houses to show to the public as they learn more about the project, amenities and the value of the development. This also aids to build the brand and build market confidence.
It is estimated that 11,500 will continue to join the middle-income segment each year till 2024. This will increase the demand for affordable housing. However, the growth rate is expected to decline between the year 2020 and the year 2022 as most of the developments take a period of years to be completed. The new units for the middle-income population will then cumulatively grow to match the demand for those years.
In an interview conducted by the star newspaper, the CEO of MI Vida and Garden city Chris Coulson said that there is so much potential in the market that needs to be unlocked. He also added that real estate developers are not keeping up with the new trend of more people joining the middle-income population each day. This, of course, creates a gap in the market and to bridge this space, he encouraged real estate developers to embrace the available chance to provide for the middle-income population as attractiveness in areas such as Kilimani, Lavington, Kileleshwa is declining. Areas such as Ruaka, Nairobi West, Kiambu, Ruiru, Roysambu will continue to meet the increase in demand by the middle-income population, is added.
Coulson urged the government to address some the issues affecting the real estate industry in Kenya such as delayed licensing by the county and national government leading to stalled projects and Kenyans being unable to access mortgages due to poor financing structures like high-interest rates and uncertainties leading to buyers lacking the confidence to get mortgages.