Why two bedroom units are in high demand

An interior view of a two-bedroomed apartment.[Courtesy]

Are you a real estate developer? Then you can bet your returns on two-bedroom units around the city.

The houses, according to real estate experts, are the current hot cakes in the sector that is wiggling its way out of the downturn caused by the Covid-19 pandemic.

Kenya Bankers Association (KBA), which produces quarterly reports on the status of real estate sector, said trends show that the houses in demand are mostly those that target the middle and upper class, and are not more than four storeys.

“The trend we are also seeing as observed towards the end of 2020 when we were carrying out the survey - but this is likely to be one of the things emerging – is that two-bedroom apartments are also quite attractive even as we talk about the regions,” said KBA Director for Research and Policy Samuel Tiriongo.

The data was contained in the March 2021 Housing Price Index report by KBA.

“Other specific attributes relating to the transactions during the quarter show that the most common transactions were for two-bedroom houses and units in four-storey buildings, that are predominantly two years old,” the report said.

But this demand, according to real estate and development expert Maurice Ochieng, may be just a coincidence of the pandemic.

He said the current demand was more on studio apartments because of their pricing as people are looking for quality space at less cost.

Ochieng says the inclination towards two-bedroom units at the moment can be explained by the economic impact of the pandemic with people moving into low-cost houses as a result of shrinking incomes.

“In the recent past, because of the economic situation there has been general shift in the level of income,” he told Real Estate.

“This shift, he explains, has caused people to change houses by scaling down to units of either the same rate if it is outside the city or less for those who choose to stay within."

“There is fairly a lot of squeezing,” he added.

According to the Kenya National Bureau of Statistics (KNBS) Labour Survey, the number of people in employment in June 2020 was 15,870,357 compared to 17,816,382 during the same period in 2019.

This means about 1,946,025 people lost employment following the onset of Covid-19 in March last year.

This could further explain why the March 2021 Housing Index survey by KBA recorded a lot of market activity during the fourth quarter of 2020, probably signifying that most people were scaling down their shelter needs.

“This points to two possible reasons: First, the affordability aspect and, secondly, more supply of units in the lower segment given land availability compared to the upper market segment,” the report said.

Dr Tiriongo said the shift towards two-bedroom houses was a reflection of the country’s demography. This is in relation to the active labour age group and youthfulness of the population.

“A lot of people are not within the age bracket of 50 and above so they are still young or with a young family," he said.

"For those who are starting out as a family, you will find that they start from the two-bedroom unit and later they can move to larger houses. So the two-bedroom houses are quite attractive.”

According to the 2019 census, there were 26.4 million Kenyans aged between 15 and 60 out of the total population of 47.6 million people.

This younger population, Tiriongo said, explains the housing demand, which comes with cost considerations. When a child joins the family, need usually arises for an extra room.

“And in that adjustment either people can move to a three-bedroom apartment, which then means because of cost considerations, you are likely to move from a high-cost unit to a slightly low-cost one for the extra room,” he said.

This could even make the family move outside the city so that they do not spend more.

“It might not be necessary moving out of Nairobi, but if you were in Kileleshwa you might consider moving to either Kiambu Road or Langata area,” he said.

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