As part of JLL’s commitment to improving transparency in Sub-Saharan African (“SSA”) real estate markets, JLL’s Strategic Consulting team has been investigating the status of the affordable housing sector in the region. The issue of housing affordability is a source of concern for most countries across the African continent. Given the current pace of population and urbanisation growth, the shortage of housing is expected to increase dramatically in the coming decades, potentially entailing a barrage of social and economic problems. While our intent is to cover the whole Sub-Saharan African region, the countries upon which we have focused our analysis are primarily South Africa, Kenya, Nigeria, Ghana and Tanzania. The key findings from our research will be published on social media. This second article aims to provide an overview of the housing deficit within Sub-Saharan Africa, in addition to exploring whether affordable housing really is affordable.
According to the Centre for Affordable Housing Finance in Africa (CAHF) in 2016, a substantial housing deficit exists within Sub-Saharan Africa: South Africa (2.3 million units), Kenya (250,000 units annually), Nigeria (17 million units), Ghana (1.7 million units) and Tanzania (3 million units).
In light of the apparent housing deficit, many countries have dedicated a substantial portion of their efforts to breaching the gap within the affordable housing market. Such efforts have been outlined in their various national vision plans, namely: National Development Plan: Vision for 2030 (South Africa), Vision 2030 (Kenya), Nigeria Vision 20: 2020, Vision 2020 (Ghana) and The Tanzania Development Vision 2025.
Supply of affordable housing stock within key cities in SSA
The majority of affordable housing supply within South Africa (SA) is predominantly subsidised by the government and accounts for approximately 30% of the total residential property in the country (CAHF). Within South Africa, there are numerous initiatives aimed at breaching the gap within the affordable housing sector whether it be reduced mortgage initiatives, units available for rental or purchase, development schemes aimed at first time home owners or the provision of government subsidised housing.
In Johannesburg, South Africa, there has been a substantial amount of affordable housing development within the Southern parts of the city. Furthermore, Project Fleurhof (Ext 2) undertaken by Calgro M3, is set to be one of the largest integrated housing developments within the Gauteng region, comprising 9 600 units. On completion, Project Fleurhof will accommodate approximately 83,000 people.
As part of its Vision for 2030, Kenya is to undergo a substantial amount of development over the following years, currently achieving delivery of approximately 50,000 units annually (CAHF). A large portion of this development is to be completed in Nairobi, where the second phase of the Urban Renewal project is to comprise of 100,000 units within the Eastlands area. Other low cost housing initiatives in the country are implemented on a much smaller scale with some developments comprising just 150 units. A unique approach in breaching the housing gap within the market, one of Urbanis Africa’s projects involves the sale of plots of land to low-income households, where they are then able to engage with the buyers in a construction programme.
The supply of affordable housing within Nigeria is unable to keep up with the rapid growth and urbanisation of the population. As a result, the government is encouraging private/public partnerships in an attempt to increase the delivery of suitable housing to the Nigerian population. There are various ongoing schemes within the country with a notable development being Rock City in Abuja. The project is to comprise of 10,000 units upon completion, with the first phase of 5,000 units already complete. CAHF estimates that approximately 100,000 units are brought onto the Nigerian market each year.
In Ghana, the majority of affordable housing development is undertaken in the Greater Accra Region, Kumasi and Takoradi with approximately 90% of the supply being provided by small, local contractors. According to the CAHF, approximately 40,000 units are being brought onto the market annually.
In line with the Tanzania Development Vision 2025, the Tanzania Public Servants Housing Scheme (PSHS) which launched in 2015, is envisioned to comprise 50,000 units by 2020 with three of the thirteen anticipated projects taking place in Dar es Salaam. However, at the end of 2016, only 700 of these units have been completed.
Existing price points of current supply
The graph below represents the average prices of two bedroom affordable housing units as per data gathered by JLL.
When assessing the price points of current supply, it is crucial to understand whether this supply is able to meet the current demand and whether or not that translates into affordable housing for those in need of it. An assessment on such affordability is discussed below.
Is affordable housing actually affordable in SSA?
The table below presents the forecasted income distribution of households within the cities under review in 2017, as per Oxford Economics data:
Assuming that 30% of households’ income could be used as a relatively standard measure in calculating their capacity to repay a mortgage, it is estimated that households with the possibility of purchasing affordable housing units within each of the cities under study, are those highlighted in yellow above.
Consequently, based on the average price points of supply as previously indicated, it is estimated that 60% of households within Johannesburg are unable to afford an affordable housing unit within the city. Furthermore, the portion of total households unable to afford an affordable housing unit within the remaining cities are as follows: Nairobi (51%), Abuja (12%), Accra (75%) and Dar es Salaam (85%).
It is worth noting that the majority of the population in four out of the five cities are unable to afford such units. Furthermore, only 25% of households within Accra and a mere 15% of households in Dar es Salaam are able to afford these units.
It is for this reason that we are able to deduce that the majority of current supply of affordable housing within Sub-Saharan Africa does not meet the needs of the population in demand and is not ‘affordable’ as such. It is ironic that the provision of such housing is labelled as ‘affordable’ when the majority of the population within the cities under study are unable to afford such a unit.
Although efforts are being made to address the housing deficits within the various countries, it seems that there is a misalignment in the priority ranking of this issue, judging by the size of the gap in the need and delivery. Perhaps alternative measures are required in order to accurately address this problem.
In our subsequent article, we investigate technologies which are to bring down the construction costs of affordable housing in the hope of further breaching the gap within the market.
*Co-Author: Kimberlee McLoughlin
The construction of the tallest private residential building in sub-Saharan Africa has begun. International real estate development and investment company, Lordship Africa recently broke ground for the project.
The project dubbed 88 Nairobi will comprises of a 44-floor, high-end, dedicated residential condominiums designed to five-star hotel standards. The residential houses include: 1 and 2 bedroom apartments and luxury penthouses at 40 floors and above, which will have three or four bedrooms. Residential houses begin from the 8th floor, with the lower floors containing a gym, parking area, shops and a restaurant.
The target market
The target market of the houses is people who work in Upperhill. The location is home to embassies, multi-national corporations, blue-chip financial companies, the center of medical facilities, and the high-profile legal fraternity.
Lordship Africa is a leading international real estate development and investment company based in Nairobi, Kenya. Lordship Africa is a subsidiary of the Lordship Group which was established more than 25 years ago in Central Europe.
88 Nairobi is the 2nd Flagship project in Kenya of Lordship Africa’s portfolio. It demonstrated its development expertise in its pilot project (Karen Hills) in Kenya .This is a master planned gated community with 60 fully serviced one acre plots.
A further two projects are lined up, Skyview, along Ngong Road and Central Park, a mixed use development near the Ngong racecourse.
Africa is developing fast, but unfortunately, not everyone in the construction industry is smiling. In particular, South Africa’s construction and engineering sector is in a bad cycle, with an index trading at 69% lower than in 2009.
Some grim statistics
PwC’s third edition of its “SA Construction” study looked at nine top construction companies listed on the JSE, for the financial year ending in June 2015. Eight of these nine companies showed a decrease in market capitalisation. Overall, market capitalisation decreased by 38%, compared to the previous year’s study. There was a further 9% decline in the four months that followed.
This is worrying news, given how crucial the construction industry is to South Africa’s economy. It contributes a large part of GNP, plays a key role in development and contributes substantially to the country’s GDP. Then there’s the labour market to consider – according to Stats SA, the South African construction sector employs more than 1.4 million people.
There are several challenges facing construction in South Africa at present.
The struggling rand
Firstly, there are the looming economic issues. The country’s slow economic growth makes for a sluggish construction sector, and in 2015 we were hit by serious knocks to the rand in relation to the dollar.
As the value of the rand decreases, project costs rise, as does the price of construction materials like steel and oil. Commodity markets are affected, with subsequent decreases in revenue being felt by major construction firms, such as Murray & Roberts and Group Five.
A poor-performing currency means plummeting profitability for construction firms. When economic growth stalls, so does the demand for construction work. If the demand for new construction work remains poor in 2016, it will pose a serious challenge.
Then there’s the issue of corruption, with companies paying governmental departments to have their tenders fast-tracked, and cartels that limit healthy competition on the scene. Collusive tendering in the public sector prevents consideration of competitively priced bids from varied players and undermines the reputation of the industry.
Power concerns abound, not just politically but in terms of actual energy. Eskom’s power problems alone can have devastating consequences for construction projects, causing costly delays.There was also not enough public sector expenditure for, anddelays in, energy projects likeEskom’s Medupi and Kusile power stations.
In March 2015, construction on Eskom’s 4,800 MW Medupi coal-fired power station was halted when workers downed tools – but it was just one of many obstacles and delays. In the long run, power shortages may force construction companies to look into increased mechanisation, the future effects of which remain to be seen.
Apart from added safety concerns, which mean more forking outon insurance, there’s the very real problem of a shortage of skilled labour. There are few trained artisans, and few coming into the industry within the younger generations, and staffed skilled at supervision at the first level are also in short supply.
Some contractors have sought skills elsewhere, only to be met with high salary demands – and staff costs already contribute 29% of total operating costs.
Political and union unrest is also putting severe pressure on the mining industry, with industrial action increasingly making headlines. Post-Marikana, lending firms have also shown less confidence in the mining industry, which has a direct impact on construction and its costs.
All in all, there are many factors that government, analysts, investors and construction companies will be keeping an eye on this year.
On the bright side
There is some hope on the horizon. Larger contractors have launched skills development schemes to meet skills demands, and they’re being nudged by government to partner with their Presidential Infrastructure Co-ordinating Commission to coordinate and increase their training efforts.
The increase in social infrastructure spend by government, including investment in housing, schools and the building of roads, brings some hope for near-future work in South Africa.
Others are looking beyond the domestic market, to infrastructure opportunities on the rest of the continent and in Australasia, to bring in revenue. There is growing demand for infrastructure and services in Africa, and local construction firms are advised to focus on intra-African trade and export-related opportunities.
The government’s National Development Plan holds promise for future growth, and there are also positive future highpoints, such as the Commonwealth Games schedules for 2022, which will require a host of projects. Those in construction should prepare to manage their short-term liquidity issues in order to take on such projects to meet South Africa’s growth demands.
KH Plant Rsa
BizTrends2018: Green buildings, fit for a sustainable purpose
Image source: www.pexels.com
With this in mind, scientists have indicated that climate change is “powered” by carbon emissions generated by primarily first world countries, however, African states are more sensitive or vulnerable to the impact of climate change. This is largely as African states don’t have access to vast financial resources and governments face incredible pressure to balance their spending on much needed primary and secondary infrastructure development, with mitigating the effects of climate change, for the benefit of the populous. It’s hardly surprising then that green building or building for sustainability is increasingly becoming integral in the design and construction of building in many parts of Africa.
In line with this, there are three notable trends in the green building space. These include:
Building for resilience
Resilience has become a bit of a buzzword when we refer to designing and building to mitigate the adverse effects of climate change, however, a key question here is “can we help societies thrive in a world we do not control?”
The key for smart developers is to aspire to incorporate climate responsiveness and “designing within constraint” concepts when developing buildings. In doing so, it is easy to recognise that building for sustainability better enables the development to leverage on the power and water resources that are available, which also makes good business sense.
Added to this, there is rapidly growing social consciousness to the importance of resilience and the need to safeguard and manage critical resources in a more sustainable fashion. This maturing social consciousness is driving a mindset change among savvier consumer – businesses and/or citizens, as the primarily targeted tenants of commercial and residential spaces – towards being more “green” or environmentally friendly. Where green buildings enable these consumers to reduce their consumption, which in turn also increases the propensity to reduce the carbon emissions emitted by these developments and provide increased resilience to uncertain service delivery. These are significant value-adds to savvy consumers – and what benefits these consumers also benefits the developer/owner. As a result, we can expect that architects and consulting engineers will continue to be tasked with coming up with alternative and cost-efficient building designs to offset energy and water consumption, reduce carbon emissions and improve the overall operational efficiencies of new building projects.
Growing business opportunity in urban renewal
While demand for green buildings continues to grow, these will not replace the importance of existing urban and city centres. In fact, new building projects only represents a small portion of the entire built stock from 2010, which means there is an even greater opportunity in refurbishing the existing built stock with green principles – keeping energy efficiency top of mind. This form of urban renewal can take place in different forms such as – but not limited to – corporates establishing campuses around their head offices, or retro-future proofing old city centres – and through the inclusion of renewable energies and biological processes.
Some cynics might argue that refurbishments are costly and do not make economic sense. Yet, there is actually a strong business case for implementing energy efficiency measures. It is important to evaluate the full life cycle costs of any intervention. If specified and installed correctly, systems and structures can produce a sustainable return on investment (ROI) that can amount to between 20-70% of energy and gain revenue through this investment.
Green urbanism for smarter, greener precincts and cities
Out of the box, a green city is a complex undertaking for any economy – whether developed or emerging. While many regions across Africa continue to experience rapid urbanisation, space limitations and strains on existing infrastructure in urban nodes – not to mention that several of the industrial drivers behind these economies, like mining and agricultural activities, are generally located away from urban areas – is driving a movement towards green urbanism.
We need spaces that will seize opportunities to connect communities and nurture societies sustainably and for the future – and green urbanism is the practice of creating spaces that are beneficial to society and the environment. It’s about promoting mixed-use urban developments that bring residential neighbourhoods, retail and commercial parks back together into a smarter, ergonomic city-type environment that is future-proofed and sustainable. New approaches to green urban mix-used developments also offer vast opportunities to tap into previously excluded property markets in outlying or more rural areas across Africa.
When sustainability is kept top-of-mind as a crucial aspect of every design endeavour – from technology specification to materials selection and labour practices etc. – the potential and the results are extraordinary, and market leaders amongst the developing countries in Africa are achieving great strides. As more nuanced initiatives continue to emerge and mature, so too do opportunities to effect positive change and make a difference in fostering and supporting a green economy through every project and business initiative.
2015 Construction Report on Africa: A focus on Angola
Angola currently has the sixth-largest stock of infrastructure on the continent after recording Africa’s fastest growth pace in fixed capital since the year 2000. The construction sector expanded by double-digit figures over the past five years in spite of a high level of concentration in the industry and challenges in obtaining credit. This significant growth has brought in large amounts of foreign investment and Angola has the continent’s second largest number of construction-related jobs at foreign-affiliated companies after South Africa.
The oil producing country’s private sector is largely underdeveloped, and economic growth is being driven by government-dominated sectors such as construction, energy and transport. Currently, most of Angola’s oil is found offshore, with little spill-over effects into other industries. Addressing infrastructure constraints in transport, water, and electricity will go a long way in supporting the government’s economic diversification efforts, and should have positive spill-over effects on the wider economy.
The government is planning to spend almost US$23bn on the non-oil economy during 2015-17 and has identified agriculture, food, services, refineries, public utilities, transport, and logistics as areas that can reduce the country’s dependence on the oil sector. Some of the non-oil projects announced in November 2014 include the Biocom, Kizenga, Pedro and Negras industrial parks (to be implemented during 2015-16) as well as the Kassinga and Kassala Kitungo iron ore mines. Investment will also be sourced from the private sector. Regarding the state’s contribution, fiscal consolidation in response to the decline in oil prices and the associated impact could result in some of these infrastructure projects being postponed. One strategy authorities could opt for, although not confirmed as yet, is that the SWF shift its strategy to invest less abroad and as such take over some of the projects that would have been covered in the fiscal budget.
Source KPMG Africa
Before you construct a house it’s important that you estimate the amount of money that you will spend on the project.
The process of estimating the cost of construction is usually complex as you need to consider many factors in order to come up with an accurate estimate. Some of the factors that you need to consider include:
Condition of the Site
The condition of the construction site can increase or decrease the construction costs. Some of the conditions include: wetlands, poor soil conditions, conflicting utilities, contaminated materials, overhead lines, ground water, river or stream crossings, buried storage tanks, endangered species habitat, and archaeological sites.
The location of the site will also affect the cost of construction. For example, if you are construction your house in a high value area, you will most likely put up a high value property which will be more expensive than when you are putting up a low value property in an average or low value area.
Choice of Architect
Architects not only design buildings, they also ensure that the buildings are constructed according to plan. While new architects will try to cut corners in order to lower the costs of construction, this isn’t the case with experienced and reputable architects.
The reputable professionals will thoroughly follow the construction process and ensure that everything is done perfectly. This is to protect their brand. This means that if you hire a reputable professional, you will most likely spend more money.
The amount of money that you pay to the people working on the site varies from one place to another. In general the labor costs tend to be high in the urban areas as compared to the rural areas. This is because the cost of living is much higher in the urban areas.
The time that the contractor is expected to complete the construction greatly affects the cost of construction. An increase in project duration greatly increases the construction costs due to increase in indirect costs.
Are the raw materials required in the construction process near the site of construction? If they are within the site the cost of construction will be low, but if they are within the site you will have to spend more money.
These are some of the factors that affect the cost of constructing a house. To ensure that the house lasts for a long time ensure that you don’t compromise on the quality of the materials that you use.As Chase Contractors we are pleased to highlight that we can offer all these services under one roof .
Increasing a property’s value can have a variety of benefits for the homeowner. Whether you plan to sell your house soon, or are just interested in getting the most out of the work you perform, home improvement projects can have a significant impact on the overall value of your home.
The major systems of a house-including the heating, electrical, plumbing, and sewage systems-must all be current and in good working order. It’s common for older homes to require some updates as systems become outdated and malfunctions occur. If any of these systems are in need of repair or an upgrade to bring them up to current standards, they are the first thing you should spend your money on.
Home improvement projects that repair these major systems are especially important if you plan to sell your house. Prospective buyers want to know that a residence will not require significant work in order to be livable. In addition, any appraisal or inspection that’s performed in conjunction with a sale will identify whether these systems are in need of repair or have been recently updated, which can positively or negatively affect the sales price.
You can get significant returns on your home improvement expenditures when you focus on curb appeal. Consider jobs like installing or replacing siding, replacing windows, installing a new garage door, or putting in a stylish new front door. These types of projects add curb appeal to a dwelling without a huge cost.
An unfinished attic can be the ideal place for a new bedroom or a hobby room. On average, most homeowners can expect to spend $4500.00 or less on this project. The end result should net a recovery of over 70% of the cost when it’s time to sell the house.
The kitchen is an integral feature of any home, and so remodeling the kitchen is an effective way to increase its value. Remodeling can vary depending on your home improvement budget. Even minimal projects-such as installing new flooring, updating sink fixtures, and installing new light fixtures-can have a major impact on value. Homeowners on a tight budget might even choose to stain or paint cupboards and install new hardware for a fast and easy kitchen face-lift.
Adding a bathroom is an effective way to add value to a dwelling. Depending on your space and budget, you might choose to add a full bathroom or even just a half bath. The net increase from a half bath may be as much as 10%, while adding a full bath could increase the value by as much as 20%.
Plan your home improvement projects to ensure that you get the most return on your initial investment. You may be surprised at the significant impact you can have on overall value even with a modest project.
Ceiling is the upper interior surface of a room and there are two main functions of a ceiling both decorative and functional . Whilst not only being decorative and functional, they also provide insulation, thereby preventing heat loss in redundant areas above the ceiling.
The following are the ceiling types common in Zimbabwe :
Ordinary ceilings: Materials will consist of 6mm Rhino-boards nailed to and including 32mm x 32mm branders with metal cover strips and 75mm Rhino-cornices. This type of ceiling can be fitted in any house or room, but is a very ordinary ceiling and the cheapest option to install.
Plastered ceilings: Materials for this ceiling will consist of 9,5mm Rhino-boards screwed to and including 32mm x 32mm branders with Fiba-tape over the joints of the boards and Polystyrene cornices. Plastering of complete ceilings with Rhinolite will follow installation. This type of ceiling is mostly fitted in entertainment areas and main bedrooms. It is more expensive, but adds value to your home.
Ordinary ceilings under tin roofs / outside where water could be a problem: Materials will consist of 4mm Nutek-boards (Fibre cement), nailed to and including 32mm x 32mm branders with metal cover strips and 75mm Rhino-cornices. This type of ceiling is fitted where water could cause problems. Panels harden when water is spilled.
Suspended ceilings: A more commercialised type of ceiling. Materials will consist of 12mm Vinyl covered, Gypsum panels (1200 x 600) on white T-Sections and white wall angles. This type of ceiling is often fitted in kitchens and bathrooms, because of its clean and neat appearance and the fact that it never needs to be painted.
Painting a room or your entire home can be both rewarding as well as economical. Consumers are faced with many choices when they choose to build a new home, and painting is usually one of the last things on your mind and one of the last things to be completed prior to the flooring installation. If you have purchased a home from a builder, your options will include the color of paint and quality upgrades, however painting the home yourself is not usually an option. This section will focus on new home owners who are going to paint their new homes themselves. The section on Paints, types, quality and texture will be of interest to those people whose builder will finish the painting on their behalf.
Provided below is detail about the tips we have summarized :
- Always prepare the room properly before painting, including sanding, repair of nail holes, imperfections, cracks, covering flooring and furniture, etc
- Use top quality paints to obtain a better covering and long term performance of the paint. The initial cost may be more expensive, however you may only have to apply one coat of paint vs. two and your paint will last longer than poorer quality paints.
- Wrap your paint brushes in sealed plastic bags overnight to protect them and avoid leftover paint from drying on your tools.
- Also use top quality tools when you are painting. A poor quality brush or roller will leave streaks and marks, while better quality tools will deliver superior results.
- Follow a step by step process when painting a room. Prepare the room, paint the ceiling first then the walls and finally the finishing work around doors and windows.
- Always use a primer as your first coat of paint. A primer paint is often less expensive than your final coat, will seal the surface to be painted and will bond the finishing coat better.
- Plan your paint application – primer coats, areas were you will use a flat paint, low sheen, semi-gloss and gloss paints. Glossy paints will withstand high traffic use better, however they also will show imperfections more than other lower sheen paints. Take extra time to prepare your room If you plan to use a high gloss paint.
- Take care of your tools, ensure they are thoroughly cleaned at the end of the day to avoid damage to your paint brushes and clotting of paint.
- Consumers may want to wear clothes that they are not concerned about, since most clothes will get some paint on them during your painting activities.
- Select your colors carefully; neutral colors are easiest to accessorize with furniture and paintings and make your home easier to sell if you plan to sell your home in the near future. A mauve colored bedroom might be your favorite, however many prospective buyers may not agree with you.