The need among Kenyans to associate with the affluent has given real estate developers rich opportunity to till new fortunes.
Home owners have now been lured away from the traditional detached bungalows to townhouses in leafy neighbourhoods, a new survey by the Kenya Bankers Association (KBA) indicates.
In Nairobi, the estates that fit the bill include Kileleshwa, Kilimani, Lavington, Westlands, Spring Valley, Riverside, Runda, Karen, Garden Estate, Parklands, Ridgeways, Muthaiga, Loresho, Kitisuru, Adams Arcade and Mountain View.
Outside the capital, the estates that are sought after include Nyali in Mombasa, Milimani in Kisumu and Milimani in Nakuru, according to the KBA Housing Price Index.
Dumping the stand-alone bungalow that was accompanied by a garden, new home owners prefer to share a wall with their neighbour and share amenities such as a common playground for their children.
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This has led to more development of single-family townhouses, usually two storeyed, as more people opt to reduce their living space for the aura of dwelling with the affluent.
“Further, the results reveal that the presence of back-up generators and other
social amenities correlates with higher house prices, but inversely correlates with higher floors within a building indicating that home-buyers prefer low-density than high-density buildings,” KBA said.
With the cost of land in these areas sky high, the cheaper option for developers has been to construct several townhouses on one parcel to maximise returns.
“Unlike previous quarters where apartments dominated house demand, townhouses were the most preferred in quarter one of 2020 at 45 per cent, followed by apartments (33 per cent) and maisonettes (12 per cent),” said KBA.
Interestingly, despite a general slump in prices, houses in areas such as Kileleshwa, Kilimani, Westlands, Spring Valley and Riverside continued to attract high demand, with eight out of 10 deals closed between January and March.
The KBA index is an analytical tool that tracks housing sector dynamics and pricing movements.
The appetite for the townhouses for the first quarter of the year pushed its concluded sales to 13.95 per cent, the highest for the sector as demand for apartments and maisonettes contracted by 95.9 per cent and 57.1 per cent, respectively.
This paints a picture of buyers seeking affordability but at the same time serenity, security and proximity to the city centre that comes with the affluent neighbourhoods.
Still, the real estate sector struggled to shed the sustained high prices that have weighed down the industry for long. Overall, house prices decreased in the first three months of the year.
According to the index, house prices decelerated by 0.54 per cent in the review period, marginally reversing the 0.61 per cent negative growth rate reported in the fourth quarter of 2019.
“By the KBA-HPI measure, house prices have remained in the deceleration path for the fifth consecutive quarter,” said the report.
The trend was “compounded by constrained ability of potential buyers to afford homes currently on offer in the market”.
Lack of momentum
“The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterised by a sign of normalisation of house prices as the market comes into balance after a prolonged period of sustained price growth,’’ said KBA Research and Policy Director Jared Osoro when releasing the index on Tuesday.
But the rush for development in affluent areas has thrown off balance areas around the capital and environs that were once the real estate jewel in terms of demand.
The areas of Thindigua, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai, Waiyaki Way (Uthiru, Regen, Kinoo, Kikuyu), Mbagathi Road, Ngong Road and Lang’ata recorded a drop in demand.
Security and serenity of the areas played a major role as they recorded a reduction in house prices, with only seven per cent of transactions being done in these areas.
The cluster that recorded the second-highest number of transactions at 16 per cent included Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi and Kahawa Wendani areas.
These areas have attracted homeowners who work in city but want to enjoy the pace of these remote towns over the weekend, as a majority build bungalows and stand-alone properties.
Even as the taste in houses shifts from bungalows to townhouses, the real estate sector has not been spared by the reeling economic shocks occasioned by the coronavirus pandemic.
Downward streak
The sector’s decline in the first three months of the year extended a downward streak in major towns around the country to 15 months.
But it is not all gloom, according to the KBA index, as it projects the sector is slowly inching back to a situation where demand and supply will balance.
Developers in the sector will have something to smile about as house prices are expected to decelerate at a slower rate in the coming months as demand increases.
‘’While the market remained largely depressed, the marginal easing was supported by the supply-demand interaction with a leaning towards more demand in a relative context,’’ the KBA-HPI indicated, adding that demand shifts in the quarter were based on concluded sales, which rose 13.95 per cent
Previously, the sector saw an extended period in which prices kept increasing as demand outstripped supply.
Attracted by the enviable prices, developers swooped in for the kill, turning every other space in major towns into a construction site.
With more houses being constructed than people could afford to buy, prices started going down, and some properties were put up for auction.
iamohammed@standardmedia.co.ke
