Kenya: Government Signs Hydro Developers Limited to Construct 30,489 Affordable Houses in Kiambu County

30 November 2020

Nairobi — Nairobi-based real estate developer Hydro Developers Limited has partnered with the Kenyan government for the construction of approximately 30,489 affordable units under the Big Four Agenda, at a cost of Sh3.0 billion.

The project dubbed 'Hydro City' will sit on a 302-acre piece of land in the Kamiti area along the Northern Bypass Road in Kiambu County.

The project will comprise 10,166 studio units of 31 SQM, 9,384 one-bedroom units of 45 SQM, 6,256 two-bedroom units of 62 SQM, and 4,692 three-bedroom units of 91 SQM.

Specific unit prices are yet to be disclosed.

Kiambu County is one of the areas that the government enlisted that will be used in the implementation of the affordable housing projects, others being, Machakos County, Lang'ata Sub-County, and Starehe Sub-County.

Analysts from Cytonn Real Estate say focus on Kiambu county is mainly supported by several factors among them positive demographics, relatively good transport network, availability of land in bulk, and recognition of Kiambu as Nairobi's dormitory thus hosting a huge working-class population.

Between 2009 and 2019, Kiambu County recorded a population growth of rate 48.9 percent from 1,623,282 to 2,417,735 according to the population and housing censure report by the Kenya National Bureau of Statistics.

The county also has a relatively good transport network as the area is served by the Northern Bypass, Thika Super Highway, and Kamiti Road.

Hydro City will be the third Public-Private Partnership (PPP) project under the affordable housing initiative, with some of the other projects being River Estate Project in Ngara being developed by Edermann Property Limited, and Pangani Housing Project in Pangani by Tecnofin Kenya Limited.

"The above partnership is an indication that the government continues to enlist the help of the private sector for development and financing of affordable housing with aim of achieving its target of approximately 500,000 housing units by 2022," the analysts say.

They however warned that PPPs have not been achieved their full potential due to their ineffectiveness resulting from several factors among them regulatory hindrances such as lack of a mechanism to transfer public land to a Special Purpose Vehicle (SPV) to facilitate access to private capital through the use of the land as security.

There has also been a lack of clarity on returns and revenue-sharing. The extended time-frame of PPPs has also been a hindrance mainly because private developers prefer to exit projects within 3-5 years.

Bureaucracy has also been an issue, as has slow approval processes.

Nevertheless, the analysts say that partnership is a stride in the right direction and will drive the supply of affordable housing which is currently lagging behind on its target number of housing units having only delivered approximately 228 housing units so far through the Park Road affordable housing Project in Ngara.

"In some developed countries, the private sector developers were key players in resolving the country's housing deficit, casing point Singapore. It is therefore important for the Kenyan government to review the current PPP structure to make it more favourable to private developers and thus boost the achievement of the Big Four Agenda on provision of affordable housing."

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