News
Slum houses one of ‘most lucrative’ ventures in city
Kibera slum in Nairobi. A study by UN-Habitat says that houses in the slums have among the highest returns among businesses in the city. Photo/FILE
Posted Monday, December 22 2008 at 21:20
In Summary
- Landlord can recover cost of building after 10 months, says new report by UN-Habitat
Owning a rental house in a slum is one of the most profitable businesses in the city, according to a new UN-Habitat report.
In 2004 alone, tenants in slums paid Sh2.35 billion to their landlords, but the owners of the houses were unwilling to reinvest the huge sums to improve the quality of the houses.
Kibera, the largest slum in Nairobi, is the most profitable although the other slums are equally attractive.
According to the UN–Habitat study, the cost of building a single room is about Sh13,000. The room can be let at about Sh1,300 a month, which means that an investor can recover the initial investment in 10 months.
“It would seem quite possible that unauthorised housing is the most lucrative investment in Kenya today,” says the UN report.
Another study, “Slum estate: The low-quality high-price puzzle in Nairobi’s slum rental market and its implications,” carried out just before January, but published in Science Direct journal last July, makes similar conclusions.
However, it says that the recovery period is twice as high as that given by the UN-Habitat report.
A team led by Prof Sumila Gulyani of the Columbia University in New York, US, had conducted a study of 1,755 households in Nairobi slums and concluded that the business was lucrative, though not as profitable as the UN report suggests.
Gulyani carried out the research on behalf of the World Bank.
“The pay-back period for a housing investment for a single room, would take as twice as the UN report had indicated but is still a very lucrative business,” said the researcher.
The study said most of the houses in Kibera were illegal, of low quality and crowded. Yet the rents remained high.
“Unlike in many other cities of the world, an extraordinary 92 per cent of the slum residents are rent-paying tenants rather than “squatters” who own their units,” said Gulyani.
The Kibera paradox has been blamed on corruption in the allocation of building rights. In the 1980s, land in the area was allocated to civil servants and Provincial Administration officials through political patronage.
A 2002 UN study sampled 120 landlords and found that 41 per cent were government officers, 16 per cent were politicians, and 42 per cent were other absentee owners “who visited Kibera occasionally”.
“Only a handful of the structures belonged to people who lived in the slums,” the report said.
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Submitted by kenmare69Posted December 24, 2008 07:01 PM
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Submitted by Wanjiku98
nani_ngombe, if people wanted majimbo, they would have spent their time and energy in their rural areas.They would also be earning from wherever they work and invested in their rural areas. You are clapping for nothing. If the 2m people in Kibera(majority) went back to the lake side city, Raila would not be PM today. You are too emotional. Majimbo is not going to help us. We got to wake up, do something and refuse to live like animals. Majimbo is not happening. Learn to live with that fact. It can only happen in your household.
Posted December 24, 2008 02:09 PM -
Submitted by kenmare69
Folks who leave their shagz for the city are lured by the promise of opportunity and places like Kibera become their easier choice to settle given their broken pockets. If govt. focused on revamping infra-structure in rural areas, people would be able to engage in lucrative ventures there, and the massive rural-urban migration would be halted. But you have to wonder when the authorities will realize that the issue of sprawling slums is not just a public health issue but a moral issue as well. You’re right, SJ502; to them, these are fertile pools of votes.
Posted December 24, 2008 08:08 AM -
Submitted by Hillaryio
I think Wanjiku98 has a viable point. Most young people, after completing form 4, have high expectations from the cities. They imagine that if they work hard, they could sustain themselves and even help their families back in the villages. However, they encounter the "real life". After 6 years in the slums, it is very hard to get them to back to the villages. Some of them go back in coffins. But, we can't really blame them. They don't have opportunities in the villages and they are just trying to make ends meet.
Posted December 24, 2008 03:55 AM -
Submitted by emgoja
The problem with the slums is that they are owned by the gov't officers; the ministers, the MPS the president etc. how can they think of a better sollution to this problem when they are actually the benficiaries? Kenya needs a complete overhaul of the old school of thought. If people still elect Biwot for a leader, how do think we can progress.
Posted December 24, 2008 03:27 AM
RSS
We don’t really need majimbo to solve the problems besetting us. Majimboism in and of itself cannot, for instance, eradicate corruption and nepotism. The best it can accomplish in this respect is to shift the base of operation from national to regional level. What we need is a shift in mindset pertaining to how see ourselves as a people. As long as we keep buying into the hopeless rubbish that pits us against each other, our minds and lives will remain locked in a stinking hell and not even majimbo would come to the rescue.