Zanzibar Social Security Fund





Mobile Taarifa






Sunday, February 18, 2018

Trouble in paradise: How the allure of luxury houses is fading away

Construction of gated communities spurred by growing middle class seeking privacy and convenience. [Courtesy]
The artistic impressions and marketing lingo used on websites and brochures of Kenya’s surging gated communities can easily be confused with what paradise is supposed to look like.
It is marketing at its best, heavy with adjectives. “You’ve dreamed of living in a country-inspired yet urban setting. You’ve dreamed of an elegant home in the country. You’re nostalgic for the sound of
cocks crowing in the morning and the warmth of wood burning fireplaces in the evening,” says the home page of a property in Thika.
ALSO READ: Real estate directors summoned over abrupt closure of branch office
“With over 84 acres of natural lush landscape located in Nanyuki on a backdrop of Mt Kenya and Loldaiga Hills with a view of Aberdares from the Rooftop pool lounge in all the villas, (this) lives up to what it means to have the best of both worlds,” promises an exclusive development in Nayuki.
“You will be spoilt for choice between spending the day at our spacious, exciting mall and relaxing in the comfort of your own home. Every day is an opportunity to enjoy a buzz-filled, fun lifestyle experience for mom, dad and kids,” says yet another development on Mombasa road.
With a promise of privacy from the poor majority and an assurance of sharing breathing air with fellow moneyed neighbours, living in a gated community is every upper middle class Kenyan’s dream.
The high walls, cabro-tiled roads, gourmet kitchens, manicured walkways, swimming pools, club houses and convenience stores exclusively used by the residents provide a perfect artificial cover from the realities of economic inequalities in Kenya.
It is the absolute status symbol and everyone who can afford to live in a gated community is scrambling to get into one, or so it seems. But hidden behind the high walls and big gates is trouble cooking in paradise, and signs are starting to appear. On Friday, 119 houses at Kitisuru Gardens in Kiambu went under the hammer after their developer, Homex Housing, faced difficulties in completing the project. An unspecified amount of money which prospective home buyers had paid through off-plan purchase went up in smoke.
Under off-plan purchase, prospective home owners pay for a house at a discount when it is still under construction. ALSO READ: Why Africa's super-rich wants to own homes in Kenya At Kitusuru Gardens, the houses were valued at Sh10 million when the project began in 2012. Buyers paid Sh2 million to book the units courtesy of the plans they were shown. “They changed the designs of the houses mid-way and moved some units from where they were originally located.
Then the dates of handing over the houses kept on changing,” one buyer told Weekend Business. “Furthermore, some amenities in the brochure including a swimming pool, a club house and convenience shop suddenly disappeared,” said the buyer. Those in the know say Homex Housing had over-stretched itself by doing several projects at the same time, which caused cash flow issues.
Trouble started when the company increased the number of units for the Kitisuru Gardens project from an initial 114 to 119 to raise more money.
A number of home buyers pulled out as others sought litigation. But the problem is not unique to Homex. Around Nairobi, a number of developers are struggling to finish their gated community projects on time as they battle problems ranging from inadequate finances, undelivered promises and unavailable buyers.
Meanwhile, completed projects are taking longer to fill, throwing developers into a public relations and credit repayment nightmare. As international magazine Quartz recently put it, “Nairobi built shiny new business districts but not enough tenants have shown up.”
ALSO READ: How political intrigues led to rare dip in land values You only need to visit the social media pages of developers to see the extent of the troubles facing the industry.
Urithi Cooperative Society Limited, for instance, has in recent days been under fire from home buyers over the slow speed of completing some of its projects.
“My husband paid for the Juja houses that were to be completed in June 2016. To date this has not happened. Last year, we were told to add Sh360,000 for cabro. Why start so many projects that overwhelm you at the expense of customers?” one buyer known on Facebook as Lilian Lili complained on the company’s wall. “We understand your concerns.
Kindly note that we will be handing over the Juja Nyumba Mia One houses tentatively on March 18, followed by other housing projects,” responded the cooperative.
Motivated by a surge in demand for houses by what has been hyped as an increasing middle class and rosy reports by property firms, developers continue to pump in billions of shillings on the ground hoping to strike gold. According to property consultancy firm Knight Frank’s annual Wealth Report released last year, Nairobi has 6,527 dollar millionaires.
The African Development Bank says about 16.8 per cent of Kenyans are in the middle class, majority of them in Nairobi. Real estate’s contribution to the country’s gross domestic product (GDP), or the total value of goods and services produced in an economy is on the rise, growing 55 per cent from Sh343 billion in 2012 to Sh532.6 billion in 2016. For the last five years, real estate has contributed about eight per cent to GDP.
Only agriculture, manufacturing, wholesale and retail trade have contributed more to the economy. In its Africa Report 2017, Knight Frank cited rapid population growth and urbanisation as the key drivers of property market activity across sub-Saharan Africa.
“Its (Sub-Sahara’s) population is growing at a faster rate than that of any other global region and its demographic profile is both young and increasingly urbanised,” said the firm.
ALSO READ: Prices of land and houses at new low With such good numbers of moneyed individuals, gated communities, which used to be a preserve of neighbourhoods west of Nairobi, are increasingly moving to the neighbouring counties of Kiambu, Machakos and Kajiado where there is available land.
Joska Township along Kangundo road, 35 kilometres from Nairobi, which a few years ago was a patchwork of dusty plains and scattered simple family dwellings will soon be home to Osten Gardens. The 300-unit project will comprise 216 two-bedroom units on Block type A, with 18 blocks holding 12 units each. Block Type B will have 13 blocks holding six units each while Block C will have six stand-alone two-storey maisonettes of three bedrooms each. Phase one is set to be completed in the second quarter of the year.
A few kilometres away, Stima Sacco is putting up a Sh1.3-billion gated community called Stima Plains on 20 acres in Malaa. It will consist of 340 units of two-bedroom apartments, three-bedroom maisonettes and three-bedroom bungalows. Next to it, Hass Consult has put up Casa Mia Estate. It comprises 454 three-bedroom villas on 41 acres. The houses are being sold for Sh5.95 million for cash buyers and Sh6.95 million for mortgage purchasers. But when you drive on Mombasa road, the number of huge real estate projects with almost no occupancy is frightening. Some owners have resorted to dropping the prices after realising their properties are not attracting tenants.
“The prices are correcting themselves, which is a normal thing in the real estate cycle,” Anthony Kinja of Wealth Inc Realtors says.
“Demand creates supply and a surge in prices. At some point when the market starts to even itself, the prices will go down then up according to demand,” he argues.
ALSO READ: Tatu City vows to continue work
At Sunset Boulevard, a gated community development in Athi River, a two-bedroom apartment that was costing Sh40,000 a month in rent three years ago dropped to about Sh18,000 last year, but has since risen to Sh23,000. Economists say the downturn in fortunes has been caused by over-estimation of the market by industry players. “Many Kenyans are unnecessarily living in informal settlements because developers have decided to be blind to the low-income segment where there is huge demand and are instead chasing a non-existent middle class,” says Dr Samuel Nyandemo of the University of Nairobi’s School of Economics.
Owning a house in a gated community can cost a fortune. A four-bedroom house at Migaa Golf Estate in Kiambu costs up to Sh39 million. A three-bedroom house at Five Star Meadows in the same county costs Sh26 million. At Kitengela Plains, a three-bedroom maisonette costs Sh13 million. And at Sidai Village in Syokimau a three-bedroom house goes for Sh8 million.
Unmatched convenience And although the gated communities come with unmatched convenience, home owners have to part with monthly service charges which at times contradict the effort to escape payment of rent that buyers are searching for. Charges for cleaning, landscaping, security and general maintenance can range from as low as Sh1,500 to Sh100,000 depending on the location of the estate and its amenities.
A report by the Kenya Bankers Association (KBA) shows house prices slowed in the second quarter of 2017, with real estate having been affected on both the demand and supply sides. On the demand side, said KBA, the purchasing power of potential home owners had been eroded while on the other end, the slowdown on credit has limited supply of houses to the market.
The growth was the slowest since the association started releasing the index in 2015. KBA Director of Research and Policy Jared Osoro says the trend was an indicator of the lacklustre performance of the economy since 2013. “For so long, developers were influenced by constrained demand and reduction of credit,” he says.
Mr Osoro says many home owners had become sensitive to cost and were moving away from such high-end dwellings as bungalows, maisonettes and townhouses to the low-end market such as apartments. RELATED TOPICS: building and construction.

No comments :

Post a Comment