Category: Uncategorized
-
Housing costs in Kenya. Why cost of acquiring a home in Kenya is high.
Housing costs in Kenya. Why cost of acquiring a home in Kenya is high.
On average, Kenya has one of the lowest construction rates in the world. Kenya also has one of the highest land prices in the world, much higher than in developed countries such as USA.
Housing cost can be divided into 3 basic categories.
1.Low cost
2.Middle cost
3.High cost
Low cost housing.
This costs an average of kes 20,000 per m2 to construct. These houses are mostly in areas such as Kayole, and over 2 km from tarmac in major towns around Nairobi.
The breakdown is as below.
low cost Cost Item Kshs
%
Land 500,000.00
16.58925017
Preliminary 20,000.00
0.663570007
Construction 2,000,000.00
66.35700066
External Works 20,000.00
0.663570007
Contingency 4,000.00
0.132714001
Professional fees 100,000.00
3.317850033
Project Management fees 10,000.00
0.331785003
Marketing 0.00
0
Financial Charges 360,000.00
11.94426012
Total 3,014,000.00
100
From this, we can see land cost is around 16.5 % of total housing costs. This is more or less within the international averages of 20%.
This means that in low cost housing, bank interest at 11.9% of total housing costs is what needs to be adjusted so as to reduce costs.
Middle cost housing.
middle Cost Item Kshs
%
Land 1,500,000.00
32.34501348
Preliminary 20,000.00
0.431266846
Construction 2,500,000.00
53.9083558
External Works 25,000.00
0.539083558
Contingency 5,000.00
0.107816712
Professional fees 125,000.00
2.69541779
Project Management fees 12,500.00
0.269541779
Marketing 0.00
0
Financial Charges 450,000.00
9.703504043
Total 4,637,500.00
100
In middle cost housing, using the average cost of construction at kes 25,000 per m2 for a 100m2 house, the land cost is 32% of the total housing cost. This is higher than the international average of 20%.
Such areas as Kitengela, Ngong, Ruiru where a 1/8th piece of land costs 1.5m will give the scenario above.
The financial charges, with interest rate at 18% is also quite high.
Solution will be for Government to look for ways that will reduce interest rates and reduce cost of land.
High cost.
high cost Cost Item Kshs
%
Land 3,000,000.00
40.62563478
Preliminary 20,000.00
0.270837565
Construction 3,500,000.00
47.3965739
External Works 35,000.00
0.473965739
Contingency 7,000.00
0.094793148
Professional fees 175,000.00
2.369828695
Project Management fees 17,500.00
0.23698287
Marketing 0.00
0
Financial Charges 630,000.00
8.531383303
Total 7,384,500.00
100
For high cost housing, an abnormally huge percentage of housing costs are taken up by land. The 40% land costs are way beyond the average 20% in other parts of the world.
In high class neighborhood such as Kahawa sukari, garden estate etc, most of the housing cost is taken up by the land.
Conclusion.
Land price appreciation in Kenya on average has a rate of between 25 to 100% annually.
Last year the price of 1 acre of land in Upper Hill CBD was kes 250m.
Current asking prices for the same acre is kes 400m. This represents a 60% appreciation rate per year.
Last year a residential plot in Syokimau 1km form tarmac was going for kes 1.5m. Its currently selling for 2.5m. This represents 66% appreciation annually.
This appreciation on land price is higher than the international average of 5 to 10%.
Construction cost for a middle class building in 2008 was kes 18,000 per m2. After 5 years, it has gone to kes 25,000.
This represents 8% annual appreciation rate which is normal and in tandem with the international rates.
Clearly, Kenyan land appreciation rates have gone viral and only the Land Commission can tame this with the introduction of Idle land taxation.
Francis Gichuhi Kamau, Architect.
info@a4architect.com
-
Viability between bedsitter, 1,2,3 bedroomed apartment. Return on Investment
area cost cost per floor no of units per floor rent Rent per year ROI
bedsitter rent 6000
22
550,000.00 5,500,000.00 10
60000
720000
7.64 1 bdm rent 8000
30
750,000.00 4,500,000.00 6
48000
576000
7.81 2 bdm rent 11000
60
1,500,000.00 6,000,000.00 4
44000
528000
11.36 3 bdm rent 15000
100
2,500,000.00 5,000,000.00 2
30000
360000
13.89 Bedsitters and I bedroomed will give a faster RETURN ON INVESTMENT than 2 and 3 Bedroomed units. These are more desirable in terms of profitability.
Francis Gichuhi Kamau, Architect. -
Kinoo, Kikuyu Seeking Joint Venture for development of apartments.
Cost Item Kshs
%
Land 32,000,000.00
12.74595714
Preliminary 1,260,000.00
0.501872062
Construction 140,000,000.00
55.7635625
External Works 7,000,000.00
2.788178125
Contingency 2,800,000.00
1.11527125
Architectural fees 8,400,000.00
3.34581375
Quantity Surveying 1,400,000.00
0.557635625
Structural Engineering 2,800,000.00
1.11527125
Elec/Mech Engineering 1,400,000.00
0.557635625
Interior Design/Landscaping 700,000.00
0.278817812
Legal fees 1,400,000.00
0.557635625
Project Management fees 1,400,000.00
0.557635625
Marketing 8,500,000.00
3.385644866
Financial Charges 42,000,000.00
16.72906875
Total 251,060,000.00
100
-
Joint Venture,highrise apartments, Ngong road
Cost Item Kshs
%
Land 64,000,000.00
12.13732626
Preliminary 1,260,000.00
0.238953611
Construction 297,450,000.00
56.41012025
External Works 14,872,500.00
2.820506013
Contingency 5,949,000.00
1.128202405
Architectural fees 17,847,000.00
3.384607215
Quantity Surveying 2,974,500.00
0.564101203
Structural Engineering 5,949,000.00
1.128202405
Elec/Mech Engineering 2,974,500.00
0.564101203
Interior Design/Landscaping 1,487,250.00
0.282050601
Legal fees 2,974,500.00
0.564101203
Project Management fees 2,974,500.00
0.564101203
Marketing 17,351,250.00
3.290590348
Financial Charges 89,235,000.00
16.92303608
Total 527,299,000.00
100
-
Site Pictures
stair case area. pic above.1st floor balcony area below
1st floor family room toilet next to terrace
ist floor family room next to terrace/triangular window area
1st floor terrace area below
kitchen on ground floor
ground floor entrance lobby
first floor staircase landing area
master bedroom area with partial old wall
bedroom on 1st floor straight ahead after staircase landing
1st floor family room next to terrace at triangular window
living room from entrance lobby area
new door linking garage to main house
garage area
front view
front view
front view
