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BUSINESS

Lowcosthousesstilloutofreachasdeveloperscitehigh
costsofinputs

OneoftheKenyaNationalHousingCorporationprojectsinNgara,Nairobi.PHOTO|SALATONNJAU
INSUMMARY

DecenthousingispricedoutofthereachoflowtomiddleincomeearnersinEastAfricawhosegrosspayrangesbetween$200and$2,000.
ProspectivehomeownersinEastAfricaareunlikelytoacquirelowcosthousesanytimesoon,withdeveloperscitinghighcostsofland,buildingmaterialsandfinancingmortgagesasfactorsthat
havemadeinvestinginthesectorlessattractive.
UgandasNationalHousingandConstructionCompany(NHCC)hastakenouta$9millionloanfrompanAfricanurbanhousingfinancierShelterAfriqueforalowcosthousingproject,butithas
turnedoutthatthedeveloperwillusethemoneytoputup162housingunitsinNamungoona,aKampalasuburb.
Whencomplete,thehouseswillsellatbetweenUsh200million($74,956)andUsh250million($93,695)thehighestpriceintheregionasdevelopersinRwandaquotepricesforlowcosthouses
atanaverageofRwf40million($57,882),whileinTanzania,thepricesrangebetweenTsh45.75million($26,913)andTsh128.9million($75,827).
DevelopersinKenya,ontheotherhand,quotetheirlowcosthousingunitsatKsh2million($22,385).
READ:Kenya'sNHCpushesforprefabstoboosthomeownership<URL:/business/NHCpushesforprefabstoboosthomeownership//2560/2279188//muoh72z//index.html>
ThismeansdecenthousingispricedoutofthereachoflowtomiddleincomeearnersinEastAfricawhosegrosspayrangesbetween$200and$2,000.
READ:Challengeofprovidinglowcosthousingforbuyers<URL:http://www.businessdailyafrica.com/Challengeofprovidinglowcosthousingforbuyers//1248928/1745602//u212tpz/
/index.html>
BettyBennadineAmony,informationmanagementofficerattheNHCC,toldTheEastAfricanthatthepriceforthehousingunitsinUgandareflectsthecostsofsettingupthefacilities.
Developerslookatseveralfactorssuchasquality,constructioncostsandavailabilityoffinanciersforbuyersintermsofmortgages.However,NHCCisstudyingvariousoptionsandcreating
partnershipstomakehousingalotmoreaffordableforlowincomeearnersandallUgandans,MsAmonysaid.
AnatoliKamugisha,themanagingdirectorofrealestatefirmAkrightProjects,saidlowcosthousinginUgandaisstillamythduetohighconstructioncoststhatincludelandwhosepricesnowrange
betweenUsh100million($37,478)andUsh300million($112,435)peracreinKampalaMetropolitanArea,whichcoversthecity,thedistrictsofMpigi,Mukono,WakisoandEntebbetown.
MrKamugishaarguesthatlowcosthousingisonlypossibleifdevelopersbuildmanysemidetachedunits,withthegovernmentofferingincentivestowardssettingupotherinfrastructureroads,
waterandelectricityintheestates.
Wealsoborrowatthesamerateasanyotherindividualborrowingfromthebankingtofinancetheconstruction,andsoweneedtosellthosehousesataprofit,MrKamugishasaid.
DatafromtheBankofUgandashowsthatlandpricesinKampalaincreasedby25.4percentoverthe12monthperiodtoJune2013,drivenbyincreaseddemandafterthereopeningoftheLand
Registry.
Therealestateindices,whichwereintroducedin2011,alsoshowa4.2percentincreaseinthecostofresidentialpropertybetweenJune2012andJune2013anda22.1percentdecreaseinthecost
ofcommercialrentalspacebetweenSeptemberlastyearandJune2013.
Theriseinthelandpriceindexof25.4percentintheyeartoJune2013,combinedwithagreaterwillingnessonthepartofbankstolendformortgagesandlandpurchaserelativetothesameperiod
in2012,suggeststhatmanynewborrowerswillbeacquiringhomesandlandathighercosts,saidBoUinitslatestfinancialstabilityreportfortheperiodendedJune2013.
Similarly,thecostofconstructionroseby1.9percentinthe12monthsendedSeptember,accordingtoUgandaBureauofStatistics,duetoa1.3percentincreaseinpriceofinputsforresidential
buildings,a1.4percentincreaseinthepriceofinputsfornonresidentialbuildingsanda4percentincreaseinthepriceofinputsofcivilworks.
Ugandashousingdeficitcurrentlystandsat1.2millionunits,accordingtoNHCC,withKampalaaloneestimatedat750,000,whileKenyashousingdemandstandsat150,000unitsperyear,
whereasonly35,000unitsaresupplied.
Amongtheseunits,only20percentareconstructedspecificallyforthelowincomegroups,while80percenttargetthemiddleandhighincomeendsofthemarket.
Lowcosthousing
InMaythisyear,KenyasNationalHousingCorporationannounceditwouldbuild7,000lowcosthousesonThikaSuperhighwayandMombasaRoadinabidtoreducethehousingdeficitinthe

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country.
ManagingdirectorWachiraNjugunasaidthehouseswillbeonebedroomapartments,soldforKsh2million(22,385.8)thecheapestlowcostunitintheregion.
Ourtargetmarketarepeopleinthelowerandmiddlemarketsegmentswhowanttoaccessdecenthousingataffordableprices,MrNjugunasaid.
READ:InKenya,owningahouseremainsafantasyformost<URL:/business/InKenyaowningahouseremainsafantasyformost//2560/2019704//ebmu58z//index.html>
Lastyear,theTanzaniaNationalHousingCorporationsoldover182lowcosthousesandplanstosellanother214unitsinKigamboni,asuburbofDaresSalaam.
Initsfiveyearstrategicplan,TanzaniasNHCplanstodevelop15,000housingunitsbytheendof2015,5,000ofwhicharetobeallocatedtolowincomeearnersandtherest,forthemiddleand
highincomegroups.
Tanzaniashousingdeficit,however,standsatthreemillionunits.
Meanwhile,RwandaSocialSecurityBoard(RSSB)inOctoberlastyearsuspendeditsplantoconstruct1,000lowcosthousesinKigali,sayingthecostoflandwasnotaffordable.Rwandas
countrywidehousingdeficitcurrentlystandsat25,000everyyear.
READ:Rwandanpoortowaitlongerforaffordablehomes<URL:/Rwanda/News/Rwandanpoortowaitlongerforaffordablehomes//1433218/2226130//40vq1tz//index.html>
Wearestilllookingforlandtoinvestinlowcosthousing.Weneedsupportfromgovernmenttogetaffordableland,Dr.DanielUfitekirezi,thethenheadofinvestmentsatRSSB,toldRwanda
Today.
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