National Housing Corporation (NHC) plans to enter the down-market real estate segment in its next major construction project.
The move marks a shift in focus to lower-income earners who have increasingly been cut out from home ownership. The agency has invited tenders to acquire a bloc of at least five acres of land in Nairobi’s middle to lower income estates to build a high density housing project consisting of three-bedroom units retailing at about Sh5 million.
The corporation forecasts the project will begin immediately the land, within a 20-kilometre radius of the Nairobi City Centre preferably in Kiambu, anywhere on Thika Road or in Embakasi, is acquired.
James Ruitha, the NHC managing director, said that the proposed project will enable the agency to provide housing in a market segment with ready demand while presenting profit-making opportunity.
“We needed to develop a project for the middle income class who would ideally not afford such high end homes,” Mr Ruitha said, in reference to a newly completed project of 105 apartments developed by NHC in Kileleshwa.
It was not immediately possible to estimate the number of planned units since the size of the project will be dictated by how much land NHC is able to get, which will be capped at 15 acres.
The MD said that the housing agency would buy the land using internal resources generated from the sold-out projects it has backed.
NHC, which is mandated with implementing the government’s housing policy, has in the past developed homes targeting the upper middle income segment, which has maintained a steady appetite from buyers.
In the Kileleshwa project, for instance, a three-bedroom flat was selling at Sh11.5 million, which is more than double the price of homes in the planned development.
Real estate experts have attributed the soaring property prices in a majority of Nairobi neighbourhoods to high land-cost component as a proportion of the total expenses incurred in delivery of housing to the market.
Housing minister Soita Shitanda said that scarcity of government land for the development of homes stood in the way of NHC mandate in providing affordable housing, and by extension moderation of the real estate market.
“There is no government land that can be given to NHC to build homes, which has left property prices open to pressure from market forces,” Mr Shitanda said while projecting that the development of the road and rail infrastructure would cool the property market.