By Ogova Ondego
Published May 14, 2024

Affordable housing has been uppermost in most low income earners'minds across urban Kenya even though few understand how pricing of houses is done. John Gaiko, a Quantity Surveyors, told us some time back that availability of land, infrastructure, services, interest on development financing, professional fees and the developer's anticipated profit margin are some of the factors that determine cost of houses. Gaiko, who worked with the Ministry of Works and National Housing Corporation for long before founding Gaikonsult, argues that only by addressing these factors will the soaring rents and property prices be brought down.Affordable housing has been uppermost in most low income earners’ minds across urban Kenya even though few understand how pricing of houses is done. John Gaiko, a Quantity Surveyor, told us some time back that availability of land, infrastructure, services, interest on development financing, professional fees and the developer’s anticipated profit margin are some of the factors that determine cost of houses. Gaiko, who worked with the Ministry of Works and National Housing Corporation for long before founding Gaikonsult, argues that only by addressing these factors will the soaring rents and property prices be brought down.

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The QS recommends that all ‘available public land be bid for instead of being allocated to land speculators as has increasingly been the case in urban areas. He says the bids be based not on the ability to purchase but on the intended overall development.

“The Government would do well if it invite bids for any available land and ensure that only those who meet the requirements are offered the land,” he says. “No corrupt deals should be entertained.”

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Gaiko not only calls on the Government to reduce taxation on building materials to make housing more affordable but also on developers not to expect too much profit from their investment.If land continues to be sold at the current high prices, Gaiko avers, the housing problem in urban areas will only get worse. He contends that the land on which Bahati, Kaloleni and Shauri Moyo estates stand in Nairobi’sd Eastlands is more valuable than the slum-like structures on it.

Such land could be offered to bidders for building modern residential housing blocks in place of the current dilapidated housing ones.

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Where infrastructure like roads, water, sewerage, electricity and telecommunications already exist, the cost of development is reduced considerably, QS Gaiko says.

Various property developers contend that developers would be better served if the government made water and electricity supply readily available as this would both attract more developers and facilitate construction work.
Having to construct sewers and build roads in areas without such infrastructure becomes a deterrent to developers as the forbidding cost will push up development costs and thus affects the price of houses.

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Defining a house as walling, roofing (shell) and openings (windows and doors), Gaiko argues that low-cost houses do not require expensive materials or fancy finishing. The other amenities, he says, can be put in place by the occupant according to need.Gaiko explains that developers must target a specific market. For there to be affordable or low cost housing, developers need to broaden their scope. For example, are they targeting low, medium or high income earners?
While high income earners have the means to own their own homes, low income earners are unable to even pay rent.

Gaiko recommends that housing for low income earners be heavily subsidized by both central and local governments. Middle class housing could also do with some subsidy from both the Government and the private sector. He further argues that developers should be preoccupied with low and middle class housing as the upper class can afford their own houses.

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Building material and the type of finish also play a crucial role in the valuing of houses.
This important element of construction constitute about 60 per cent of the value of any house.

Defining a house as walling, roofing (shell) and openings (windows and doors), Gaiko argues that low-cost houses do not require expensive materials or fancy finishing. The other amenities, he says, can be put in place by the occupant according to need.

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Gaiko recommends that housing for low income earners be heavily subsidized by both central and local governments. Middle class housing could also do with some subsidy from both the Government and the private sector. He further argues that developers should be preoccupied with low and middle class housing as the upper class can afford their own houses.Gaiko takes issue with the conventional definition of a permanent house as one built of stone and iron sheets.
He calls for an alternative definition of permanence, and the recognition and tapping use of alternative technology if the biting housing problem in towns is to be made less severe.

On professional fees which account for about 15 per cent of a project cost at the minimum, Gaiko suggests that this be pegged on the amount of time put in the work (manhours) instead of current flat rates.

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He argues that there is no point in an expert like an architect to charge money for designing each house in, say, developing 1,000 housing units when the work is actually done only once and then the plan is replicated 1,000 times. If professional fees is pegged on man hours, he says, as low as 10 per cent reduction would be passed to buyers. Professional fees is the sum charged by all experts who include architects, engineers, planners and surveyors.

QS John Gaiko takes issue with the conventional definition of a permanent house as one built of stone and iron sheets. He calls for an alternative definition of permanence, and the recognition and tapping use of alternative technology if the biting housing problem in towns is to be made less severe.The Quantity Surveyor not only calls on the Government to reduce taxation on building materials to make housing more affordable but also on developers not to expect too much profit from their investment.

He argues that greed among developers is killing the real estate industry.
“There is no effective demand for houses as they are too expensive,” he says, drawing a line between demand and effective demand. “Effective demand is the ability to purchase houses with the current prices and level of investment.”