The phase one, Mzizi Court Housing projects, has so far attracted nearly twice the number of homebuyers targeted, meaning that the project is already overbooked. It will consist of one, two and three-bedroom units with prices starting from Sh4.9 million with a flexible payment plan.
Centum RE managing director Kenneth Mbae said 450 customers have already paid cash deposits by coming to buy the apartments, overshooting the phase one supply by more than 66%.
He said that pre-bookings by prospective buyers of at least one third of units is a requirement set by Centum before groundbreaking. He added that the project has, however, surpassed the threshold.
“The demand exceeds supply supported by the expected double-digit rental yield which supports us to launch phase 2 soon,” said Mr Mbae during the ground breaking of the project.
Mzizi Court apartments are within the 102-acre Two Rivers development. It features 30 acres of green spaces with amenities such as a 1.06-acre sports district fitted with an Olympic size swimming pool, kid’s pool, seven-aside football pitch, basketball court, kids play area and 2.7km jogging tracks.
The fully-owned subsidiary of the Nairobi Securities Exchange listed Centum Investment PLC has achieved a 45% completion rate of its residential projects portfolio in Kenya, with only 55% at various stages of development.
The real estate company seems to be thriving at a time when uncertainty clouds construction industry – the current shortage (plus high cost) of cement as well as the high cost of wire rolls and steel such as D8, D10, D12, D16 might slow down the pace of construction. Prices of the two key construction materials keep rising, and this might lead to a construction crisis.
The high cost of steel started on February 24 this year when Russia invaded Ukraine. Since then, the prices of key construction materials have gone up by 14%, leaving developers worried about the future. On the other hand, high cost of cement is blamed on cost of clinker which has also been rising – clinker is a key raw material used in the manufacture
According to Samuel Kungu, a developer, the Russia-Ukraine war is partly to blame for the current high prices of the two construction materials. To him, building will be less attractive given the current tough economic situation, and ever rising cost of materials.
Developers who are the biggest consumers of cement and steel say that the trend will not only dim the dream of affordable housing but also lead to suspension of projects. Buyers too are most likely going to exercise a wait and see tactic with hopes that things will bounce back.
“Before the Russia-Ukraine war, the total cost of an almost complete four units of one bedrooms was pegged at Sh5.9 million, or Sh30,000 per square metre. Today, the same house would cost nearly Sh7.1 million at Sh36,000 per square metre,” said Kungu.
From where he sits, for real estate investment to make business sense, the escalating costs must come down. Otherwise, by the time you finish, you might end up coughing nearly double the amount you had budgeted for.
“To make matters worse,” he said. “Sh36,000 per square meter is not cast on stone. An upward trajectory in terms of cost is expected to continue. Prices are changing almost on a daily basis. New pricing of materials will continue to be the order of the day.”