NAIROBI, Nov. 4 (Xinhua) -- Pan African housing finance institution Shelter Afrique on Monday urged Kenya's real estate sector to focus on constructing affordable houses in order to address the current property glut.
Andrew Chimphondah, CEO of Shelter Afrique said in a statement released in Nairobi that properties in Kenya are priced out of reach of many buyers hence the slow uptake.
"Most developers tend to add higher margins to the units they develop, which in the long run make such units rather expensive. This partly explains why there is a glut in the property market despite the reported housing shortage in Kenya," Chimphondah said.
He said that Kenya has witnessed a housing glut build-up for the past three years due to declining demand and high property prices.
"My advice to local developers is that they would rather chase less profit and more volume because if they chase the profit and not the volume, they end up not having take-ups. They can achieve this by venturing into the affordable housing space," Chimphondah said.
According to the pan African lender, the high cost of land, high financing cost, poor infrastructure and lack of utilities is pushing property prices up as property developers pass the costs onto the end-buyers.
"Land is very expensive in Kenya, sometimes constituting up to 40 percent of the cost of the house -- probably the highest in Africa. The good news is that under affordable housing, there are new technologies and new building materials that can help reduce construction costs significantly," Chimphondah added.
Shelter Afrique is a partnership of 44 African governments, the African Development Bank (AfDB) and the Africa Reinsurance Company, which was established in 1982.