The evolving East African housing dream: The case of Kenya
Much of the generation born in the 1970s to early 1980s in urban areas of Kenya grew up with ample space and greenery – single-family homes with abundant space to play outside, few, if any walls, and a strong sense of community.
Fast forward to the generation born in the post-1992 period of political turbulence and economic resurgence. In rural areas not much has changed, except land sizes have become smaller as land ownership passes from generation to generation. However, increasing land pressure means that more people are moving to urban areas, many to informal settlements and some to apartment complexes. The green, leafy suburbs seem to be out of reach for many, and the Kenyan housing dream is evolving into four increasingly distinct markets.
In rural areas, the dream is mostly to improve existing structures – maybe new roofing; connecting electricity for lights, television and other home comforts; plastering walls and floors. Some may even wish to build modern homes on ancestral land.
For those with informal employment, life in apartments is acceptable and increasingly the norm. The dream may extend to better apartments with stable electricity, reliable water and security, close to the best possible public transportation. But for this lower-to-middle-class sector, the priorities are more immediate: feeding the family, ensuring the children are educated, and eventually, achieving economic stability and financial independence.
The Pan African Housing Fund (PAHF), managed by Phatisa, certainly hopes to extend its reach to those in these rural and apartment complex areas over time. For the time being, however, we are focused on making the remaining two Kenyan housing markets a reality, thereby improving the overall housing situation for all Kenyans, step by step.
Those raised in Kenya’s middle class urban areas and now in formal employment will likely choose apartments in one of the upcoming neighbourhoods: South C, Nairobi West or Kileleshwa (in Nairobi); Nyali or the Mombasa City Centre (in Mombasa) or Milimani (in Kisumu). The goal for these residents is to eventually own a home, preferably a house in the suburbs, with a garden and some space. In reality, finances rarely stretch far enough to afford a mortgage of KSh. 200,000 (US$2,300) per month, whereas rent of KSh. 50,000 ($580) allows leeway for a car to be bought, and maybe even, a small plot of land, which often sits vacant, while appreciating in value.
This sector currently aspires to eventually raise finance through a savings and credit cooperative society (SACCO) and build on these small plots of land. Interestingly, even with these homes and apartments being built, the World Bank and Central Bank studies show that only a scant 20,000 mortgages exist in Kenya – a number which does not take into account those SACCO-financed homes, the product of years of labour, built room by room over the course of many years.
Finally, for those growing up in middle class areas such as Lang’ata, Buru, and Nairobi’s South B and South C, the dream sounds like a Kenyan version of the American Dream. This sector can just about afford the walled-in complexes of the middle-class neighbourhoods, but the dream is often similar to the SACCO-financed home, only with a mortgage, or, if really fortunate, to move into a house with some space around it, in the more densely populated suburbs. The aim: Karen and Runda (in Nairobi); Kizingoni and Nyali (in Mombasa); or Riat Hills (in Kisumu). This group may fall into the mortgage market – a market that appears small for a country the size of Kenya.
Phatisa and its PAHF is hoping to help bridge the gap between dream and reality, and to shorten the time needed to achieve the dream. Partnering with strong, reputable developers to build homes that are attractively priced and to create safe, well organised communities; communities that allow children to enjoy the outdoors in a country with some of the world’s best year-round climate.
The challenges faced are two-fold. For the aspiring home owner, the challenge is to find enough money for a deposit on the home – and with bank interest rates slowly moderating, this is becoming more and more possible, especially coupled with savings and commitment to the dream. As for Phatisa and our partners, our challenge is to resolve the diversity, supply and divergent price range of housing products. This includes increasing the range to include starter homes as well as upgraded family homes in the developments we are bringing to Kenya, and the rest of our chosen geographies in East and Southern Africa.
Phatisa shares the dream of a Kenya with better, more affordable housing for all and, starting one development at a time, we are making this a reality.
Okomboli Ong’ong’a is the East Africa Partner for Phatisa’s Pan African Housing Fund