Big fight for privacy, value in posh estates

The hands that pave rock footpaths, manicure fences and mow grass in palatial homes have been thrust into multi-billion shilling fights over their proximity to exclusive estates.

Developers keen on making a quick buck have turned to low-cost small units terming them affordable housing for workers in planned high-end estates.

But residents who know their farm hands, housemaids and watchmen will never live in these ‘affordable’ apartments but walk all the way from distant shanties, are fighting back.

They contend that affordable units will attract troves of lower middle class into their spaces and crowd out the value of their property after they paid top dollars for exclusivity.

Migaa Integrated Golf Estate Residents Association, for one, has taken developers Sycamore Pine and Home Africa to court over construction of 1,959, low-cost apartments within Migaa Integrated Golf Estate in Kiambu County.

The gated estate set on 774 acres, is a controlled development where home owners need to contact project office for direction on construction of their homes’ according to the development website.

Residents have thrown up a fit over construction of the affordable units, which they say, were not indicated in the area master plan and have commenced without requisite environmental approval and will alter the area where a quarter an acre goes for about Sh9.5 million. “The petitioners averred that there is construction of 1959 low costs apartments on the suit property without development approvals or Environmental Impact Assessment (EIA),” the suit papers read.

Migaa Integrated Golf Estate

“That the said construction goes against the Master Plan of Migaa Integrated Golf Estate and is in breach of Article 42, of the Constitution which guarantee the petitioners a clean environment. That allowing the construction would change the substratum of the area,” it read.

Equally, residents of the upmarket Westlands Estate in Nairobi also sought to stop developer Vem Investments Limited from erecting high-rise apartments in the area.

Vem Investments Limited in architectural details seen by Smart Business have plans to set up a Sh200 million housing project in the prime area located off General Mathenge Road.

Residents filed a petition with the National Environment Management Authority (Nema) and City Hall opposing construction of the luxury project in the low-density area, alleging that setting up of the planned 14-storey building will destroy an adjacent riparian land in the posh neighbourhood.

They insist the proposed development would irreversibly alter the character of the neighbourhood and trigger other factors, which have no acceptable mitigation recourse. "A development project of such magnitude will negatively alter character of the area around it," say the residents in the signed petition.

For developers, affordable housing is a lucrative venture especially after the government gave incentives in bid to encourage private sector involvement in attaining the half a million housing units.

A report by real estate firm Broll said affordable housing has become attractive to investors given the tax incentives for developers such as rebates and infrastructure cost subsidies.

The government has scrapped stamp duty for first-time buyers; promised provision of bulk infrastructure such as drainage and utilities; reduction of corporate tax from 30 percent to 15 percent for developers who build over 100 affordable units; and exemption of Value Added Tax on construction inputs. “Average yields range between seven percent and 13 percent, with government projects achieving the highest yields due to low or no land cost,” the report read.

The Affordable Housing Project has, to date, delivered over 1,600 units cumulatively, including an additional supply of 510 units in 2020.

The industry is expected to deliver over 15,000 units in the next three years. The highest projected annual supply of 11,000 is anticipated during 2024.

Affordable housing

Developers say affordable housing is required in plush areas to host workers in the homes of the wealthy residents.

But low incomes of such workers mean they cannot afford these units which retail at an average Sh1.2 million for a one-bedroom house built by the government and Sh2.9 million built by private players according to the Broll report.

Two bedroom houses cost Sh2.5 million by the state and Sh3.7 million for a similar space by private sector while a typical three-bedroom unit will cost Sh4.3 million when provided by the government and Sh5.1 million from private players.

And residents of the plush estate know that only middle-income earners can afford this units and not their workers.

“The average take-up rate ranges from four to nine units per month for private developer projects, and 10 to 20 units for government-related projects, the latter because it has a ready market in both the public and civil servant sectors for projects expected to be delivered within the forthcoming 36 months,” the Broll report noted.

Residents of wealthy estate feel this new crop of residents will reduce the valuation of the property they bought at a premium for exclusivity.

But for developers this is the most functional route to generate returns in the short run especially for the real estate sector that is struggling with a glut in office space, decline in sales of prime property as the market slows down with only semblance of demand remaining in the underserved affordable housing space.

Home Africa which is embroiled in the Migaa dispute has been in the red for almost five years posting a recent loss of Sh243 million in the half-year period that ended on 30th June 2020 from a net loss of Sh76.8 million in the first half of 2019.

The company has lost several board members including Ms Kendi Ogamba, Peter Nduati, Caroline Kigen, Linus Gitahi, Ketan Shah, and Rachel Mbai most of who resigned from the board.

The firm argued that if the court stops the construction of the affordable units it will have a significant cost implication on the company.

“The respondents opposed the issuance of conservatory orders on the ground that there are financial implications,” the court filling read.

The court still opted to temporarily stop construction with Judge Lucy Gacheru ordering the status quo be maintained, with no further construction on the subject property pending the hearing and determination of the pending Preliminary Objection.

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