- UK Climate Investments (UKCI) and FSD Africa Investments (FSDAi) confirmed a £35 million (Ksh 5.2 billion) funding commitment to a Kenyan green affordable housing venture, which has received 100% of its targeted £61 million (Ksh 9 billion) investor backing for first close.
- This will enable the locally managed fund to become operational as early as July 2021.
- The Fund is targeting the delivery of approximately 10,000 homes using modern green technologies.
- The housing units will provide affordable ownership and rental opportunities with 100% ownership at an average cost of £30,500 (Ksh 4.5 million) and rentals ranging from £100 (Ksh 15,000) to £350 (Ksh 50,000) per month.
Despite booming demand for affordable housing in Kenya only 50,000 new homes are built each year compared to a target of 250,000 housing units. This has resulted in unaffordable housing prices and continued growth of the city’s informal settlements. Today, nearly half of Nairobi’s population live in slums where construction standards are poor and unsustainable, and access to essential services is limited.
Nearly 40% of the population in Kenya live below the international poverty line and access to affordable housing continues to be a significant issue, especially in urban areas. This development of green affordable housing will focus on increased availability to the low to middle income population [whose family income is below $1500 a month].
UKCI and FSDAi’s investment mainly targets Kenya’s capital, Nairobi, and will contribute to the country’s goal of building 500,000 new affordable homes by 2022. High levels of population and economic growth in Kenya have come with increasing levels of urbanisation over the last decades, creating an urgent need and opportunity to develop housing solutions that are both affordable and sustainable. Efforts to develop low-carbon buildings in Kenya also opens a new opportunity in the country’s rapidly progressing energy transition. Kenya is already a leading clean energy market in the region, with renewables accounting for 60% of power generation as of 2019.
UKCI and FSDAi’s investments in the locally managed fund will demonstrate that affordable housing, particularly rental housing requiring long-term management, is a viable asset class for private real estate developers and investors. The investments will stimulate the flow of much needed long-term and domestic investment into this key area of development, while creating jobs in the construction and property sectors, generating profits for African businesses.
Author: Bryan Groenendaal