Rising costs force developers to tap new designs to survive

Thursday, May 13th, 2021 00:00 | By
Housing construction.

Steve Umidha @UmidhaSteve

Kenya property developers are fast changing tack, adopting new house designs owing to the increasing costs of putting up a structure.

High costs of raw materials for building, toxic taxes, and expensive labour force informs the new shift, which according to experts has led to new structural home designs such as flat roof stylings.

“The new design is inspired by two factors, one the high costs of construction and two the creative nature and desire of this generation to live in a better place which gives them the flexibility they need to personalise the house the way they want,” says George Mburu, chief executive of Mizizi Homes, a local real estate developer.

It is estimated that the average cost of construction in Kenya ranges from Sh33,450 per square metre for a standard private house in Nairobi, to about Sh72,400 per square metre for a luxurious high-rise office block in the Coast region of the country.

According to the Institute Of Quantity Surveyors Of Kenya (IQSK) president Chris Munene, these costs are factored in contract bill contingency amounts and construction labor.

“These professionals any developer must hire if you are to have a complete structure devoid of unprofessionalism…put these together with other costs of raw materials and you will see why the costs are higher,” says Munene.

Professionals who are typically engaged in Kenya include architects, engineers, quantity surveyors, clerks of works, project managers and labourers.

It is believed that those costs have more than tripled in the last 10 years and coupled with the high proportions of building costs that go into materials, present a challenge for private firms to provide cost-effective housing.

Single-family homes

National Association of Home Builders estimates that since mid-April 2020, plumber prices have risen by 130 per cent, increasing the cost of single-family homes more than $16,000 (Sh1.7 million) on average.

Alice Mukami, an independent real estate consultant says things have changed so fast in the last few years and flat roof has become  more affordable for both installation and upkeep and maintenance as opposed to iron sheets. 

“Labour is cheaper due to less risk while installing a flat roof,” adds, noting that the trend is especially appealing to young homeowners.

Installation of flat roofs, Mukami says, are also thought to be quicker and easier with fewer damage and repair costs over the lifespan of the roof. 

“Installing things like solar panels, which save on electricity, and satellites—making repairs and cleaning gutters less expensive and easier to accomplish on flat roofs,” she states.

The cost of iron sheet has been on a steady rise since 2013 when iron sheet box profile gauge 30 per 2.5 metres was retailing at an average price of Sh750 which is now retailing at Sh1,115.00 per 2.5 metre today which is being attributed to higher taxes imposed on such materials.

Also thought to hurt the sector is the higher taxation in the last two years.

Kenya Revenue Authority (KRA) reverted the rate of Value Added Tax to 16 per cent in January this year.

This is in addition to the Minimum Tax of 1 per cent of the gross turnover which is among some of the most noxious taxes.

Kenya’s real estate sector is projected to record a sluggish growth with  2021 Real Estate Market Outlook by Cytonn saying the tough economic environment brought by the pandemic knocks will be critical for the sector’s survival.

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