Low-cost building technologies to bridge the housing deficit

Rural-urban migration in search of greener pastures has attracted growing populations in Nairobi and other major towns, including Mombasa, Kisumu and Eldoret. This has pushed up the demand for housing, which keeps on increasing year after year.

 Even more, with the establishment of county governments and many economic activities opening up in rural towns, the need for housing in Kenya has never reached such a high. According to The Report: Kenya 2016, an annual publication of the Oxford Business Group, Kenya’s housing deficit is estimated at 200,000 housing units per year.

This is a figure that local developers and the government are unable to meet due to the ever-rising costs of conventional building materials. The high cost of housing has seen Kenya only register 24,000 mortgages since independence.

These are mainly home owners in the banking sector and other high cadre professions, says Julius Nyoike – the International Green Structures (IGS) country president. IGS is a building technologies firm that ventured into the local market last month.

This, Mr Nyoike says, is because of their unaffordability. “Banks are not able to bring their costs down due to the time it takes to put up a housing project – on average 18 months - a period within which the cost of building materials like cement and labour escalates,” he explains.

Any change in inflation within the building period also affects the total capital costs for putting up the houses, making them even more expensive for the buyers.

Faced with escalating costs of conventional building materials, the time it takes to complete a unit (labour costs), and the high cost of lending from banks, developers transfer these costs to home-buyers. This makes quality and decent housing out of reach for the ordinary citizens who need it most.

This has seen the real estate market which has been booming since 2008, slow down in the last two years. This is because a majority of potential home-buyers are the lower middle-class and low-income earners who cannot raise these costs. The result has been big housing developments that remain unoccupied for even over a year after completion.

This over-emphasis on the upper middle class home buyer has created a scenario whereby the housing demand has always outstripped supply, especially in the lower segment of the market. Developers have over the years filled the gap in the middle to upper reaches of the sector that are seen to be more profitable. Nothing has been strong enough to burst the mythical bubble.

What does this mean for the economy? A change in policy and strategy that will see local developers and builders embrace modern building technologies is a welcome idea. Kenya is in dire need of building technologies that create value and lower down the cost of housing.

THE FIRMS

As it is, building technologies firms have pitched tent in Kenya from where they are trying to fix the puzzle, and serve markets in the wider East African region. These include: IGS, Boleyn Magic Wall Panels and Koto Housing, all of who leverage on Expanded Polystyrene Styrofoam (EPS panels to deliver pre-fabricated building technologies.

Government-owned National Housing Corporation has also embraced this new wave of change with its locally-manufactured EPS panels.

EPCO Builders Limited which has been in the property market for the last 38 years has also introduced various innovative building technologies, the recent one being Aluminium foamwork.

The high cost of housing in Kenya, EPCO Builders Limited Managing Director, Mr Ramji D Varsani, says, is partly attributable to the high cost of conventional building materials. Therefore, building technologies are what Kenya needs to bring down housing costs and bridge the housing deficit. “The adoption of affordable and sustainable building materials will ensure that more Kenyans are housed decently,” says Mr Ramji.

The government has come out in support of building technologies as it struggles to house its own. The recent being the Kenya Police and other government employees in various ministries and parastatals. The government is in the process of implementing an ambitious plan ofbuilding 100, 000 police houses  using cheap but ideal technologies that will cost the taxpayer Sh20 billion. Initially, the project was to cost Sh32 billion if it used ‘traditional’ building technologies, according to LandsPrincipal Secretary Aidah Munano.

“EPS panels and Aluminium formwork give value in that unlike the traditional concrete and stone/mortar; they have intrinsic qualities that make them superior materials. Both are strong, durable, light in weight and are able to be shaped in any form required for building. They also have other qualities, for instance EPS is a great insulation material and is fire-proof. While Aluminum formwork gives superior walls, and requires only paint as a finishing material,” said the PS recently.

The paradigm shift is that both EPS panels and aluminium formwork are easy to assemble since they come precast from the factory. They are therefore able to deliver housing units within a relatively short time, since they require less labour and unlike concrete, one does not have to give them time to ‘dry’.

For EPS, a housing unit is ready within 30 days. With Aluminium formwork, it can be within a week depending on the availability of the materials. This cuts on labour costs.

Since the development project turns around in a relatively short time, houses get introduced into the market earlier than expected. This sees developers actually making money faster that they had expected.

 Besides, developers are able to package and deliver on projects within a set timeframe.

The other aspect of EPS and Aluminium formwork that sees them as superior to traditional concrete and stone/mortar is that the developer saves huge on foundation slabs, and reinforcements,including concrete beams, and steel rods. This is because the technologies require builders not to dig deep into the ground as the materials are light in weight. Besides, the amount of concrete that they use on walls and flooring is drastically reduced. For EPS, it is 5cm instead of the previous 20cm used in conventional building methods. The same applies to Aluminium formwork.

This translates into huge savings for developers, especially when applied on a wider-scale: in building apartments, gated communities, government housing among others. In storied buildings, EPS panels cut on the cost of the slab by more than 30 per cent, since they consume little concrete and are light in weight. Builders get to save on labour, and are able to stick to their budgets. Overall, it is estimated that local developers get to save on between 20 and 25 per cent of the total capital injection.

When these cost benefits are transferred to buyers by introducing the units into the market at a lower rate than the sky-rocketing rates that conventional builders have capped, high quality and decent housing becomes more affordable. It also becomes accessible to the lower middle-class and low-income earners – a mass market segment that has not yet been captured by the local real estate developers.

DOWN PAYMENT

Building technology firms and local builders using affordable technologies are reaching this market segment mainly through Saccos. In most Saccos, members own parcels of land in form of plots in the outskirts of the city, which go undeveloped for years as the owner stays in rental houses. This has seen members get houses built for them within a month, after which they move in and repay the cost of construction with an amount more or less equivalent to their monthly rent. This gives way to a tenant-purchase scheme that is convenience, especially to a majority of Kenyans who own plots and desire to build on them.

This kind of tenant-purchase scheme has brought competition, forcing property developers to go easy with mortgage. One such is Elsek Group, which has made it easy and convenient for institutions to own assets, including dormitories and offices through a building, transfer and operate model. The innovative payment plan does not attract any down payment. However, as a security, land has to be charged or leased to the Elsek Group to start construction.

With such innovative technologies and mortaging schemes, every Kenyan can become a home owner.

It does not always have to be concrete, stone, brick and mortar. Modern building technologies give more or less the same strength, durability and of course come with low maintenance costs. This is the new frontier that Kenyan builders, contractors and developers need to explore if they are to bridge the current housing deficit with affordable, decent high quality housing.

FYI: ADVANTAGES

• Both EPS panels and Aluminium formwork are easy to assemble since they come precast from the factory.

• They  are therefore able to deliver housing units within a relatively short time since they require less labour

• Builders do not have to dig deep into the ground since the materials are light in weight, thus a developer saves big on foundation slabs and reinforcements  

• The amount of concrete that builders use on walls and flooring is drastically reduced.

FIRMS THAT HAVE EMBRACED THE TREND

Some of the new developments making use of modern building technologies is La Casa Luxury Apartments and EPCO Builders development in Langa’ta Estate. La Casa is a private development in Rongai, has leveraged on NHC’s EPS technology to bring luxurious living to Rongai. “We have made 25 per cent savings, that we have ploughed back to enhance the standard of finishes,” says David Miako, the CEO of Exquisite Homes and director of the project.

The development started making savings right from the foundation. “Since the building is lighter than stone and mortar, one does not need a heavy foundation. It also saves on reinforcement,” explains Miako.

EPCO Builders Limited recently leveraged on Aluminium formwork technology to put up apartments for sale in Langata Estate in Nairobi. Mr Ramji confirms that they saved time in completing these buildings and it also generated economic benefits. “Developers who apply our technology for apartments and gated-community developments get to save over 20 per cent in the total capital injection,” he shares.

Aluminium formwork is easy to construct as it does not require heavy manual labour. Since it is light and easy to assemble, housing units can be built faster. “We can do two storeys in one week,” Mr Ramji notes.

Building with Aluminium formwork does not require a heavy foundation since it is a light material. It therefore saves on the foundation slab, and is also stable since its uniformity ensures that weight is distributed evenly and the entire building is one unit. “It gives good quality housing and better walls,” he says. The technology is environmentally sustainable because it does not make use of timber.

Land owners are slowly embracing building technologies due their affordability, fast and easy implementation. But it is individual Kenyans living in the diaspora who are leading this change. “They are more receptive since they got the exposure as they live in houses built using alternative technologies,”  Nyoike says.