Covid lifts demand for residential houses with large office spaces

Corner of panoramic open space office [Courtesy]

For David Chola, the onset of the Covid-19 pandemic in March last year has ushered in a pool of new customers - those attracted bigger space – inside, outdoors or both.

In his line of work as a lead architect at Adroit Architecture, Mr Chola says there has been a shift in preferences for home designs, with demand for spacious offices dwarfing that of other features such as private garden or balcony.

Chola says what was initially thought of as a knee-jerk reaction to the pandemic is slowly becoming a reality. This is as many workers seek to work from home for most of their time.

This shift is now rising the profile for mixed-used houses or stand-alone ones, with spacious working spaces. “I can attest to that. We have seen a shift. There are many homes where we have done designs, where owners have asked for space that can allow them to work from home,” said Mr Chola.

“There have also been requests for designs to allow for renovations in gated communities. We are seeing more space released for offices. We are coming in with designs to satisfy this shift.”

It is a shift that realtors are not about to assume. This is especially as the demand for standalone office spaces —mainly located away from residential areas — lose their attractiveness. The shift, first seen as temporary, is now catching the attention of real estate firms that are moving to set up mixed-use houses in residential areas, with a special focus on office space.

This is unlike before where residential estates were purely seen as places for living and having fun and one needed to cover some kilometres to report to work.

Many employees liberated from long commutes and travel are not ready to give up the greater flexibility that comes with working from home.

Centum Real Estate Managing Director Samuel Kariuki says the pandemic has now validated the case for mixed-use projects. “Mixed-use developments address some of the challenges we have seen in the Covid-19 environment. The shift is validating our model of setting up a live, work and play environment,” said Kariuki.

“Even for a standard home today, in the same way you would have included a dressing area, developers now have to accommodate some form of study or working space as a lot of office work shifts to homes.”

The allure for a home office is, for instance, seen by two of Chola’s friends who work in the banking sector. Chola says the two were given soft loans by their employers to buy furniture so as to work from home. “The level of emphasis for office space has gone up. There is some level of investment to satisfy this demand and this means the shift may not be temporary,” says Chola.

And banks are taking notice of the shift. They are willing to finance such projects, unlike before when most of their funding for office spaces was for projects in town centres. “The bank is prepared to support such borrowers and has already financed similar projects in Eastleigh and Karen,” said Chris Chege, head of mortgage finance at Cooperative Bank of Kenya.

The lender has a fully fledged projects team to appraise viability of mixed-use developments to work with clients and consultants on the projects.

Mr Chege says offices, as experienced before, are slowly undergoing change to accommodate new experiences.

This, he says, has presented an opportunity for developers to consider mixed-use developments for either sale or rental, as demand for business support services that are closer to home rises.

“Houses of the future will also incorporate offices, hence mixed-use developments will gain prevalence,” said Chege. “There is a lot of focus on sustainable livelihoods and mixed-use developments is seemingly the target for several clients seeking financial partnership with the bank.” On the flip side, Chege sees purely commercial or residential estates experiencing suppressed demand since potential homeowners now consider live, work play homesteads.

But as the shift continues, the level of earnings among Kenyans is expected to dictate the pace of this transformation.

Central Bank of Kenya data shows the average mortgage loan size was Sh8.6 million last year, staying out of reach for many Kenyans. The high cost of housing units and land for construction, as well as low-income levels, were cited as the top obstacles for people willing to tap into mortgages. This means mixed-use rental or rent-to-own houses that incorporate offices are likely to resonate more with the majority of the population, as opposed to standalone houses.

It is a space that Centum Real Estate has been pursuing, with its three projects in Kenya and Uganda being mixed-use developments. Kariuki says in many urban centres, the immediate need is affordable but quality rentals. “That is because you have a huge chunk of the population living in the lower middle class and below,” says Kariuki. “To the extent that the structure of the economy remains as it is at the moment where a significant portion earns less than Sh100,000, the immediate need is for residential properties which are in well-planned areas.”

Kenya National Bureau of Statistics data shows nearly half of workers in the formal sector earn less than Sh30,000 per month, reflecting Kenya’s pay inequality and the burden households face in acquiring basic items like rent and food.

This makes it difficult for such people to tap into mortgages and may resort to rented spaces that have office spaces.