Small housing developers face disruption by government plan
New plan will see one million housing units built in five years. FILE PHOTO | NMG
What you need to know:
- State offers large developers land to on which to construct low cost houses putting small-timers at a disadvantage.
One-man real estate firms dominating the residential housing scene face imminent disruption after the government invited real estate conglomerates to put up 8,000 units using modern technologies.
Unlike the present situation where private developers seek and purchase their own parcels of land, the invited mass-housing builders have been given a major leeway where the government will provide the land for the planned houses.
Already several mass-housing companies have set up building raw materials in the country and have had their building technologies approved ahead of national rollout.
The new Public-Private Partnership deal could drive small players out of the market since government-fronted firms would enjoy faster approval of plans unlike currently where contractors and project owners wait for months to get approval for the planned projects.
Though the advice to small and one-man real estate firms is thinly veiled, the government has given them an opportunity to remain afloat by urging them to form consortiums and come up with housing models that could be mass produced, built within a short time while maintaining high quality at competitively low costs.
This means, a housing developer, a financier and a building products firm could form a Special Purpose Vehicle to bid for the tenders advertised by the government for the Mavoko project that closes on October 30.
The tender, under the Engineering Procurement Contract (EPC) delivery model seek to promote low cost technologies that are currently shunned by Kenyans who deem them to be sub-standard.
State department of Housing and Urban Development said only companies with a record of implementing big housing projects within a short time will be granted leave to bid for implementation of the project on a 55 piece of land set aside within Mavoko Sub-county.
Under the EPC model, the government seeks to lure deep pocketed contractors or established firms with reputable records of similar large scale developments.
The EPC model, is where a firm funds development of a project to be paid upon completion once the government is certified with the final product.
“The developers, either acting individually or in a consortium, should consider quality, cost and time when executing the project that will comprise of housing units, social and security facilities with the associated physical infrastructure such as drainage, roads, water and energy connections,” it adds.
This is akin to the high-end gated communities that have become the norm implemented by individual real estate firms, saccos and even banks as well as equity funds’ firms.
The government said it was targeting to build up to one million housing units within the next five years thereby providing urban dwellers with decent and affordable houses.
To fasttrack the project’s implementation, the government said it will facilitate mass housing projects where at least 200,000 housing units will be constructed annually under the EPC model.
Contractors are provided with parcels of land for the projects where they develop site plans as well as architectural plans for the identified project.
Among the technologies being fronted are the factory made wall panels, pillars that have seen several local and foreign firms set up multi-billion shilling factories in Kajiado, Nairobi and Machakos counties.
The new public-private partnership strategy negates the National Housing Corporation initiative which has seen houses for middle level civil servants in various parts of the country built.
If successful, the project targeting the working low income earners in major towns could reduce the emergence of unplanned housing structures that continue to cause death and destruction of private properties.
