The projected selling prices of the homes is above Sh9 million for a three-bedroom home suggesting that the target market are upper middle income class and above. Photo/FREDRICK ONYANGO
Developers of middle-income residential properties are competing on the quality of finishing to win customers amid stagnating demand for houses in this segment of the market.
Mr Mutahi Wariithi, the developer of Oyster Properties, said finishing is fast becoming a key selling point given the exposure among prospective home buyers.
“With a more discerning real estate clientele who are better travelled and exposed, finishing is a deal maker,” said Mr Mutahi.
“They make a property much easier and faster to rent, as well as fetch better rental prices,” he said.
The changes in customer preferences are forcing developers to introduce unique features on their developments as they race remain relevant in a fast evolving property market amid increased supply of housing.
As a result, developers in middle income estate are introducing concepts associated with the upper end of the housing market in their new projects as they scramble for the prospective buyer who now has access to a wide choice, especially in apartments.
This is a pointer to a possible saturation in the targeted consumer class since aesthetic features including artwork on walls have previously not been key selling points for most developments in the middle income segment.
But as land prices continue to escalate, especially in the city and its precincts, developers are increasing left with little choice in building apartments to spread out the costs despite becoming harder to sell.
Among the notable diverse features is the use of tree barks for interior decoration and stone to pave the pathways while most apartments have used cabro blocks.
As developers turn to extras to lure buyers, market players have reported stagnation in apartment prices amid declining rental incomes in some segments of the market following increased supply.
Its reverberations have been felt in sluggish uptake with properties staying longer on the listings list while exposing developers to additional costs in marketing and interest expenses as most of them depend on bank loans for financing.
At Runda View Apartments along Kiambu Road, the developer is betting on the lower running costs that the homes are expected to offer through the exploitation of solar power and a water treatment plant to enable residents recycle their water.
“Today’s home buyer is looking for a quality home, but is also keen on ways to cut costs in the household,” said George Wambugu, chairman of county developers at the launch of the housing project in March.
The projected selling prices of the homes in both developments is above Sh9 million for a three-bedroom home suggesting that the target market are upper middle income class and above.
The latest housing survey by real estate firm HassConsult tracking letting and selling prices in upper middle and the high end residential market revealed that yields from apartments had on average stagnated at below the pre-global financial crisis levels of 2008.
In contrast, the survey revealed that the value of stand-alone houses had appreciated by as much as double in a five year period since 2006 on the back of improved security levels which reduced the need for clustered living offered in apartments.
Soaring prices
This meant that increased investment at current prices exposes developers to the risk of ending up with dead stock on apartments, as current lifestyle needs amongst prospective buyers make stand alone houses the most preferred.
But as the soaring land prices discourage the development of stand alone homes in the inner city estate, developers are in response moving further from the city centre where the cost of land is cheaper.
Already, new projects that now dot outlying areas including Mlolongo, Athi River and Kitengela developers are in synch with current lifestyle needs amongst young families with own compound while cost constrains ensure that some facilities are shared.
mmichira@ke.nationmedia.com
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