The property market in Mombasa County is experiencing a major shift, with low-cost houses now making their way into upmarket areas of Nyali and Shanzu.
Kenya Projects, a property development firm, is putting up low-cost housing units in Shanzu, with the firm saying of the 100 units on sale, 30 of them have been sold off-plan.
The two bedroom units with a car park are located about 500 metres from Serena Beach Hotel and are going for Sh2.5 million, which is far below the normal price of between Sh5 million and Sh10 million within the locality.
In Nyali, the company is constructing 24 units. The two bedroom units with a carpark and a garden were sold at Sh4 million, says Anthony Murithi, the firm’s projects advisor. The units are located near Cinemax on a one acre plot.
The entry of budget homes in Nyali estate marks a huge shift in the property market, since a two bedroom house in the estate goes for between Sh8 million and Sh12 million.
An acre of land sells for up to Sh40 million and according to Mr Murithi, they are able to break even by reducing the cost of construction.
“We were apprehensive at the beginning because land in these areas is expensive, going for up to Sh15 million for an eighth of an acre, but after we started off, we have been able to manage the costs since the units are within a gated community,” said Mr Murithi.
He said prices for housing units in Nyali, Shanzu and Mtwapa have been inflated due to costs associated with involvement of agents and high cost of materials.
“We don’t deal with agents, and by eliminating this chain, we have been able to leverage on lower costs and pass the benefit to the buyer,” he said, adding they source building materials directly from suppliers.
The shift from high cost to low -cost housing units comes in the wake of concern by developers that sales of high-end properties were dwindling after supply exceeded demand, with prospective home owners preferring to buy low cost housing units.
According to figures released by Hass Property Index, Nairobi is experiencing a glut especially in the high-end segment, with prices for housing units falling in the city’s outskirts. Rent for high-end housing units are also projected to decrease.
In Mombasa, although property agents say there are no official statistics yet, the same trend is being witnessed. According to Rescom Properties Managing Director, Michael Masila, sales for high-end units have slowed down, with those ranging between Sh4 million and Sh7 million selling faster.
“I have been trying to sell a house located in Shanzu, going for Sh20 million, for the past one year but have been unable to get a buyer,” he says.
Kenya Projects is riding on a wave of success after it invested in low cost houses in Mtwapa and Bamburi, where it has built one, two and three bedroom housing units going for between Sh1.5 million and Sh3 million.
By focusing on the middle income earner, the firm has sold hundreds of housing units.
In fact, they recently launched sale of budget homes going for Sh3 million in Ruiru, Kiambu County.