Affordable Housing Solutions: What’s Changing in Kenya’s Real Estate Market?
Affordable Housing Solutions: What’s Changing in Kenya’s Real Estate Market?
A look into affordable housing initiatives and trends.
September 19th, 2024
Nearly every Kenyan wants to own a home, but for most, it seems like a distant goal.
Thankfully, there is an evolution occurring in Kenya’s affordable housing scene. Kenya’s property market is changing to meet the demands of the country’s expanding population, thanks to both innovative private sector investments and government initiatives. However, what is changing, and how can the housing gap be closed for millions of Kenyans through affordable housing solutions?
What Exactly Is Affordable Housing?
Being affordable goes beyond owning a cheap house. It is a broader concept that includes reasonably priced, decent, and safe residences in prime locations. Housing that consumes no more than thirty percent of a household’s income is what the Kenya Institute for Public Policy Research and Analysis defines as affordable housing. Most banks in Kenya define it as homes priced at 10.5 million or less or more that cost no more than 200 times the prevailing minimum wage (KES 15,201 for a two-bedroom unit.)
Article 43(1b) of the Constitution of Kenya provides that every person has the right to
accessible and adequate housing. In addition, under the social pillar of the Kenya Vision 2030, the development of quality and affordable houses for low-income Kenyans is a priority.
The primary objective of affordable housing is to ensure that housing units are within the financial means of people and families. Other than the initial cost of purchasing a property, factors that affect long-term affordability such as the length of mortgages, favorable interest rates, and maintenance costs are considered. There is also no compromising on the standard of amenities, thus guaranteeing a better quality of life at a reduced cost.

Affordable Housing Solutions in Kenya
Government Initiatives
1. The Affordable Housing Program (AHP)
The goal of the Big Four Agenda’s Affordable Housing Program (AHP), introduced in 2017, is to provide 500,000 affordable housing units by 2022 to cover the 200,000 housing units deficit that the country has. With the revised schedule, this program remains a major force behind Kenya’s affordable housing market. To reduce prices, the plan involves Public-Private Partnerships (PPPs), in which developers collaborate with the government, and a Housing Fund, that aims to increase accessibility to mortgage finance. In all 47 counties, homes will be constructed on public and private property.
2. Nairobi Urban Renewal Projects
Eastlands and Pangani are two historic estates that the Kenyan government is working to revitalize into affordable housing complexes under the Nairobi Urban Renewal Program, funded by the World Bank and administered through the Country Partnership Strategy (CPS). The development of sustainable neighborhoods within existing estates and high-rise projects that densify the usage of the land are highly prioritized in the redevelopment strategy.
Four sizes of units with a focus on inexpensive housing have been recommended, given that the area is primarily populated by low-income earners. The one, two, and three bedrooms in the development have been integrated to promote the inclusion of people from different economic backgrounds. There are options available for both buying and renting in the residences.

3. Park Road Affordable Housing Project
This is one of the major projects of the Big Four Agenda and is in Nairobi’s Ngara area. Of the 1,370 units in the development, 1-bed,2-bed, and 3-bed apartments are available with prices ranging from KES 1.5 million to KES 4 million. The built environment includes mixed-use development, a nursery school, and all necessary facilities. The China Construction and Engineering Corporation and the Government of Kenya partner in this public-private partnership (PPP)
✓ To get a closer look at the various affordable housing projects that the Kenyan
government is currently involved in visit the official Boma Yangu website.
Affordable Housing in The Private Sector.
The task of providing affordable housing has been increasingly taken up by the private sector in recent years. Private developers and financial institutions are stepping up to fill the gap left by public sector efforts as they recognize the unrealized potential in the low- to middle income market. Among these initiatives are:
1. Novel Models of Financing
Private financial institutions are introducing financing options to make homeownership more accessible. For example, banks and developers are collaborating to develop Tenant Purchase Schemes, popularly known as Rent to Own, which enable potential homeowners to rent a property while contributing to its ownership.
Additionally, the Kenya Mortgage Refinance Company (KMRC), which works directly with private lenders, is offering low-interest mortgages with lowered sums for up to 25 years.
2. Public-Private Partnerships (PPP)
Private-led PPPs are becoming increasingly popular in Kenya to address the housing shortage. On land held by the government, private developers are collaborating with the county administration to build affordable housing. These initiatives ensure the delivery of affordable housing and at the same time, help developers get a fair share of profits.
The Kenyan government has chosen to partner with commercial developers as part of its Bottom-Up Economic Transformation (BETA) program to achieve a target of 250,000 units per year. To achieve this goal, land, infrastructure and tax incentives such as VAT exemption for construction materials, stamps, and duty exemption for first-time home buyers are all being used.
3. Mixed-use developments
With the development of mixed-use developments such as the Two Rivers Social City, Tatu City, and Garden City Mall, the affordable housing market is rising rapidly. These developments emphasize the live, shop, work, and play lifestyle by combining commercial, residential, and recreational spaces.
Taking advantage of the growing middle-class community now going for convenience, safety, and ample modern amenities, these developments continue to gain traction and investment from the private sector. The developments maximize available space, and this is a path that most affordable housing schemes have focused on making them more accessible and affordable.
4. Embracing Technology
To reduce expenses and time in the building industry, the private sector is now utilizing technology. The utilization of expanded polystyrene (EPS) panels and prefabrication has enabled private developers to drastically lower the price of constructing affordable housing.
These techniques enable quicker building, which lowers the cost of homes for tenants and buyers.

What is Changing in Kenya’s Real Estate Market?
The real estate market in Kenya is evolving very fast, and this is driven by several factors such as public-private partnerships (PPPs), focusing on high-density housing, the urbanization of satellite towns, sustainable building practices, and increased foreign investments.
To provide affordable housing, the government is now collaborating with private developers. This collaborative effort reduces construction costs and increases the supply of affordable homes. As land in urban areas becomes more limited, developers are opting for high-density vertical housing. This largely includes apartment buildings with multiple units that make the most of available space. This approach therefore reduces construction costs per unit.
As Nairobi gets more expensive and crowded, satellite towns like Thika, Kitengela, and Ruiru are becoming popular destinations for affordable homes. These towns are a preferred choice for developers and buyers as they offer more reasonably priced land with expanding economies and infrastructure. Kenya’s real estate sector is also now seeing an influx of foreign investors, mainly from China. It is anticipated that this investment will boost the market for affordable housing and result in more large-scale projects.
To reduce carbon footprint and the overall costs of property ownership, developers now are focusing on green building strategies. This makes properties more affordable by focusing on water conservation, energy efficiency, and green spaces. These properties are therefore more attractive to investors, buyers, and tenants.
Conclusion: A Brighter Future for Affordable Housing?
The housing trajectory in Kenya seems increasingly oriented toward affordable housing, a trend likely to become even more prominent in the coming years. With the country’s demographic shift toward a younger population, more people are embracing smaller family units due to changing economic conditions. This shift is a key driver behind the growth in affordable housing development.
Kenya’s real estate sector is also experiencing transformative changes, spurred by government-led initiatives, private-sector innovations, and the introduction of flexible financing models. As Kenya continues to grow and adapt, the expectation is that affordable housing options will become more available and accessible, meeting the needs of a rapidly expanding population.