With a current nine percent contribution to the leading East African economic power house’s GDP, the state of the real estate market in Kenya is on a roller-coaster. And the projections are enchanting. Fifty years down the line, real estate contribution to GDP is poised to astronomically shoot to two digits.
“The real estate will keep growing in order to cope with rapid growing population, the growing numbers of Kenyan middle class, an increase in demand on regional hub offices and an amplified government spending on infrastructure; all these factors will conspire to push real state to unimaginable levels,” says Mr Wachiuri, the CEO of Optiven Limited, a leading real estate firm headquartered in Nairobi, Kenya.
He notes that the industry is growing because Kenya is strategically located. “We are four hours away from any direction within Africa. This has made Kenya to become the preferred regional hub for top multinationals,” says the CEO.
He states: “Right now we can say that we are just scratching the earth and in the next 50 – 100 years, this industry is going to experience an even bigger growth and the time to take part in this growth is now.”
Indeed, Kenya is headed towards the right direction, especially given the considerable Government allocations towards infrastructural expansion. “This year we have seen 188 billion being channeled into infrastructure and energy; this is one more propeller that is steering forward the real estate market,” says Mr Wachiuri.
His positive forward-looking sentiments are further fortified by a key Bretton Woods institution’s perspective. In its recent report titled ‘Housing; Unavailable and Unaffordable’, the World Bank projects that Kenya’s total cumulative housing needs will continue to grow steadily up to 2050 where they will then begin to level.
“Kenya has been experiencing a property boom and this positive growth will keep looking up. We shall see many more global players coming into Kenya either through Joint Ventures, Private Equity or setting up subsidiaries in Kenya. We have at least witnessed some setting base in Kenya all the way from South Africa & UK,” says the real estate guru.
He adds: “We have also witnessed new shopping malls mushrooming; The Hub Karen, Two Rivers Mall, Garden City, TRM, name them. These are the malls of the future. In the next 10 years or so, their value will be very high.”
He notes that Kenya will also experience adopting of alternative building technology such as bricks, hollow blocks and expanded polystyrene technology. And his company is all set to take it to the next level, literally. “Optiven real estate has set up a huge factory, which is producing hollow blocks, road cabs, cabro and concrete poles. This is in preparation to providing our customers with low cost building materials. This will help to reduce the massive deficit as documented by the World Bank data,” says the fire-brand CEO.
Kenya has an estimated accumulated housing deficit of over 2 million units, and nearly 61 percent of urban households live in slums. 244,000 housing units in different market segments are needed annually to keep up with demand, while current production is less than 50,000 units.
Still, the full potential that is presented by the real estate market is yet to be fully harnessed. “This country is missing a major opportunity for job creation and economic growth to formalize the housing industry and encourage it to better serve low income households. National and county governments could collaborate to create a productive cycle of savings and growth by fostering increased construction and financing of affordable housing,” says Mr. Wachiuri.
He notes that Kenya’s devolved county governments have a key role in fostering increased construction and financing of affordable housing. He says: “They need to partner with private developers. They need to Zone areas of development in terms of industrial, residents, social amenities. These devolved units are also supposed to give tax waivers for developers like Optiven who amongst other things, develop access roads and drill water for communities.”
Mr Wachiuri points out that the real estate wind is certainly blowing towards the right direction, and investors who have set their sails appropriately are poised to cruise towards the tranquil waters of good returns to their investments.