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The East African : Mar 30th 2015
The EastAfrican OUTLOOK MARCH 28 - APRIL 3, 2015 D E VE LO PME N T Low cost housing beyond reach of Uganda’s poor Real estate expe≥ts estimate the minimum value of a low cost home at ≥oughly $33,005 By BERNARD BUSUULWA The EastAfrican A proposal by the Kampala City management to elimi- nate slums in favour of high density housing units has raised hopes of significant growth in low-income housing alongside renewed investor interest in upmarket real estate projects. The removal of slums would spur growth in neighbouring areas such as Wakiso and Mukono districts to absorb displaced people seeking alternative shelter. But industry experts say opportunities for low-cost houses appear scarce. While Kampala’s slum popu- lation is estimated at 2.8 million people, future housing needs attributed to this segment are projected between 300,000 and 400,000 new homes, according to real estate company Lamudi. Existing designs for low-cost homes suitable for this segment contain three bedrooms with sleeping space for up to six people — a layout driven byhigh birth rates among low-income families. Real estate experts estimate the minimum value of a low cost home at roughly Ush100 million ($33,005) with about 30 per cent of this figure allocated to infrastructure based requirements, which effectively locks out the relatively low income earners among slum residents. Whereas the government re- mains unclear on the role of subsidies increasing access to decent housing among poor fami- lies in additional investments to be executed by government and local authorities so as to reduce overall costs of housing in Uganda. An average low income person earns between Ush200,000 ($66) and Ush250,000 ($83) per month, according to government data and this requires adoption of innovative mortgage products offered by banks with durations of 30 years and single digit interest rates in order to satisfy the needs of poor people,” argued Joseph Lutwama, research and policy analysis manager at Uganda’s Capital Markets Authority (CMA). In comparison, fresh interest INVESTMENTS Kasokoso, one of the slums in Kampala. Picture: File Govt ought to invest more in infrastructural facilities so as to spur growth in low cost housing.” NSSF’s Richard Byarugaba lies, the ability of local banks to develop innovative mortgage products targeted at poor people appears limited by structural inefficiencies, evidenced in the land registry and courts of law. Real estate developers see in- creased government investment in infrastructure as key to boosting access to decent accommodation for poor people. “There is a need to achieve improved human settlement conditions in the city. But the government ought to invest more in infrastructural facilities so as to spur growth in low-cost housing and raise access levels among low income people instead of allocating subsidies for the purpose,” argued Richard Byarugaba, managing director at Uganda’s National Social Security Fund. The Fund plans to construct 4,000 to 5,000 low cost houses under its Temangalo project valued at $300 million despite several legal and political hurdles encountered since 2008. Housing units will be priced in the range of Ush50 million ($16,299) to Ush80 million ($26,079), Mr Byarugaba revealed. Besides the Temangalo hous- ing project, other low-cost housing investments include Shelter Afrique’s 2,000 units, according to industry sources. “Many investors have com- The $100 million Mega City project financed by Apex Global and R1 Corporation of India. This project will see 1,200 apartments constructed on 12 acres of land on the outskirts of Mukono 24 kilometres from Kampala City. Each apartment will be priced at $40,000-$50,000, according to the property developers. The multimillion dollar NaguruSatellite Housing project is expected to deliver about 600 apartments in its first phase, which commenced construction works last month plained about infrastructure gaps in virgin areas outside Kampala City that are fit for large-scale housing projects. The best remedy for this challenge Kenyans spend mo≥e than half of income on ≥ent, ≥epo≥t By JOHN MBARIA Special Correspondent KENYANS SPEND more than half their income on housing while affordability of land, actual and anticipated returns on investment continue to determine the volume of housing developed in the country. On average, Kenyans spend as much as 44.7 per cent of their monthly incomes on rent, water and electricity, with those in urban areas spending a higher proportion than rural dwellers. The rent burden is greatest in Nairobi, followed by Mombasa and Kiambu counties. However, the country has an annual deficit of 200,000 housing units, which attributed to a host of factors including poverty, acute shortage of planned land, high cost of developing homes and low gov- ernment investment in housing. The government has been spending Ksh4.5 billion on housing which could only help to put up 3,000 housing units at a per capita cost of Ksh1.5 million. These are some of the findings of a national housing survey released by Charity Ngilu, the Lands, Housing and Urban Development Cabinet Secretary. Coming some 32 years since the last national survey in 1983, data for the Kenya National Housing Survey was drawn from 44 counties in the country apart from Wajir, Garissa and Mandera. The three counties were not covered owing to insecurity and lack of a homebased sampling system. According to Mariam el Maawy, the Principal Secretary in the Lands Ministry, the survey was meant to make information avail- able as the basis for assessing housing needs and track the progress in providing dwellings as well as in crafting policy as stipulated in Vision 2030. Survey data was acquired from renters, owner-occupiers, developers and various professionals in the sector. “It is estimated that building materials account for 40 per cent of the construction costs,” says the report, which adds that corrugated iron sheets are the most preferred materials for roofing at 80.8 per cent while 13.2 per cent are roofed using makuti. Stones accounts for 22.4 per cent of the dwellings nationally and 44.3 per cent in Nairobi. However, half of the homes are constructed of mud and wood. On financing, the report says that most dwellings are put up from microfinance funding, employer schemes, commercial banks and Saccos in that order. The report says, “Investments by private sector players in low-income housing have been minimal because returns are not as high as in the high-income bracket.” The majority of Kenyans have to keep seek permission from the relevant authorities before putting up dwellings. However, there is a disparity between institutional and individual developers as far as compliance with the building codes is concerned. Nearly all institutional develop- ers seek permission from local authorities, the National Environment Management Authority (Nema), physical planning department and the public health department. “This shows that the level of compliance in seeking development permission by institutional developers is remarkably high,” the report says. among foreign investors in the middle and high end housing market has yielded huge commercial ventures since late 2014 amidst rising optimism over demand patterns in this segment. In spite of previous setbacks suffered by prominent developers, investors appear eager to tap into strong growth demand patterns anticipated after commencement of commercial oil production and completion of major highways connecting the city to prominent districts, industry sources say. The high-end housing invest- ments include the $100 million Mega City project financed by Apex Global and R1 Corporation of India. This project will see 1,200 apartments constructed on 12 acres of land on the outskirts of Mukono 24 kilometres from Kampala City. Each apartment will be priced at $40,000-$50,000, according to the property developers. The multimillion dollar Naguru-Satellite Housing project is expected to deliver about 600 apartments in its first phase which commenced construction works last month. 37 Mariam el Maawy, the Principal Secretary in the Lands Ministry.
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