Just a few days away the levy will be implemented, the question is whether it will affect the real estate industry. The project has attracted both international and local developers. Who have promised more than half a million houses by 2022.
These developers are expected to deliver 2000 houses annually. Will this be enough to satisfy the Kenyan house market?
see also: Housing Levy to take effect in May
Nonetheless, most would assume real estate will benefit greatly from this, however, will it?
Should developers worry?
The government promises these houses will be luxury infused with affordability. However, this is what current developers are offering. Is the government now a competition?
Although this project seeks to provide homes for the common mwananchi, the levy affects all working individuals. From those who already own homes to those who don’t. The 1.5% will affect everyone.
The housing project is expected to benefit all Kenyans of every class. Unfortunately, developers who only aim at a certain target market should already be sweating. This is if the government can indeed deliver on their word. These affordable houses will probably kick the affordable luxurious homes out of the market.
Why developers are not worried?
However, we are aware of how the Kenyan government never gets the job done. The project may never start because even the courts are against it.
Additionally, this project is under the current presidency which doesn’t mean the next will carry on with it. Hence, developers are progressing with their own projects.
Furthermore, each year people who need houses increase and the 2000 houses annually might not be enough for everyone. The project is basically directed towards those who cannot afford a proper home. Hence the people who can actually afford decent homes don’t feel the need to participate in it.
The project is aimed at those below the middle-class line. Developers don’t feel pressure to compromise on their already booming industry.
The Bottom Line
Note that, developers can also launch such projects for themselves. But this doesn’t guarantee it will have profits. A majority of investors and developers expect their property to give back. This defeats the purpose of the government project.
With the process of actually getting one of the houses being long. People will likely opt to buy homes from other developers instead of waiting for the government. Furthermore, we don’t know if the houses will benefit all counties.