Kenya woos foreign investors for low cost housing fund

The government is scouting for foreign investors to capitalise a new fund that is being formed to finance construction of 200,000 low cost homes for the extremely poor members of the society.

The social housing units, which are part of the government’s plan to build a million houses in the next five years, are expected to cost a maximum of Sh700,000 and are meant for families living in slums.

Housing and Urban Development Cabinet Secretary James Macharia said last month that the Chinese government had agreed to invest into the fund.

“We have had talks with the Chinese government and they are looking into investing in this fund. They are into big infrastructure projects but given the returns that are expected when this housing project comes into fruition, they definitely want to be part of it,” Mr Macharia said.

The National Housing Development Fund is also eyeing money from pension funds, saccos, and commercial banks as well as ordinary citizens’ savings, according to the minister.

“We are planning to come up with a bond, like the M-Akiba bond, to see if ordinary Kenyans can contribute by putting their savings in this fund.”

Mr Macharia recently wrote to the National Assembly asking for Sh6 billion to enable his ministry initiate the ambitious housing project.

A total of Sh2.6 trillion will be spent to build a million low cost homes across Kenya in the next five years as the country seeks to bridge its national housing gap that currently stands at about 1.85 million units.

According to Mr Macharia, some 800,000 houses will be built under the private public partnership (PPP) model while the remaining 200,000 homes will be built under a social housing scheme – where a unit will be sold for between Sh500,000 and Sh700,000.

Social housing refers to dwellings provided for rent or sale at a fairly low price by housing associations and local governments. It is offered to citizens on extremely low incomes or those with special needs.

To meet its target, the government has pledged to offer private developers about 7,000 acres of land as part of an incentive package.

READ: How Kenya plans to deliver homes for as little as Sh500,000

The government expects the average house price in the country to fall 70 per cent to Sh1.5 million from the current market price of Sh5 million.

This will be aided by the availing of free land to private developers as well as building of access roads, power, and water connection to housing schemes.

The project, under the Engineering Procurement Contract (EPC) delivery model, is expected to promote the use of low cost building technologies that are shunned by many Kenyans who view them as inferior.

The State is fronting the use of precast wall panels and pillars that are already being developed locally by several local and foreign companies.

Under the EPC model, a developer will fund a project and will be paid upon completion of the development once the government is satisfied with the quality of the houses.

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