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By Steve Umidha
As Kenya’s real estate industry navigates a new normal of slow sales and an oversupply of luxury listings, investment interest is coming from a predictable place – China.
This shift, coupled with a decreasing profit margin for construction projects in mainland China, has encouraged both Chinese state-owned construction firms (SOC’s) and private contractors to seek new project opportunities in the local property market – with Nairobi expeditiously becoming a hotspot for Chinese-built sky-scrapers.
A keen look at Nairobi’s Upperhill and Westlands for instance, two unparalleled districts have over the decade seen a proliferation in major construction projects, with the areas’ skyline fast transmuting at a frightening leap with buildings that are rising rather than spreading.
AVIC international, China Wu Yi Co ltd and Twyford Ceramic for instance are investing over Sh 50 Billion worth of construction projects in the Kenyan market – with AVIC International alone putting up a Sh40 billion mixed-use property, which includes the 184m-tall Avic Tower, is well underway in Nairobi, as Chinese firm Avic races to set up its Africa hub in Kenya.
The firm is putting up what it says will be a one of its kind project in East Africa at the intersection of Waiyaki Way and Chiromo lane in Westlands – bordering Villa Rosa Kempinski, ARM Cement and Mirage Towers.
But there is a problem.
There has been a growing disquiet among industry players in the last few years over the speedy approvals of such projects by local authorities especially at the Nairobi County offices – where it is believed that officials at the City Hall part with hefty bribes from some Chinese companies and representatives to sanction such multi-billion projects.
“It has been happening for a while now and some of the projects lack proper and quality finishes, some use cheap materials to put up such structures. There should be a need for local-content regulation,” commented Tim Kipchumba – a private developer and the CEO of real estate firm, Questworks limited.
What’s worse some of the sky scrapers, industry experts, say are of substandard quality and do not conform to the standards and procedures laid out by the sector – predominantly with local content.
Mr. James Munene, the president of Institute of Quantity of Surveyors of Kenya (IQSK) has blatantly termed it as ‘outright corruption’ in such offices that is being aided by the absence of strict by-laws and unwillingness by relevant authorities to enforce the existing laws in the sector.
“Let’s call it as it is, it is corruption. Those dodgy deals are happening where some of those companies are paying bribes to push for approvals at City Hall. The problem is at the enforcement level because standards exists, it is corruption” said Mr. Munene in a telephone interview.
Further adding that, “While most of them have adopted innovative class to their buildings, you realise that local content is missing in some of these projects and some of them are by-passing the procedures.”
Some of the requirements ordinarily compulsory in putting up a structure of such magnitudes include obtaining a Survey Plan from Survey of Kenya which takes 24 hours, a project report from an environmental expert and submit to National Environment Management Authority (NEMA) which takes a minimum of 5 days as well as submission and obtaining approval of the Architectural Plans which takes up to 45 days among other requirements.
Legally, a structural engineer is expected to submit all the structural and architectural drawings to relevant authorities for approval.
In a telephone conversation with the Principal Secretary in the State Department for Housing and Urban Development, Charles Hinga adamantly held that his office was not aware of such concerns.
“No, we don’t have such information. We only respond to specific issues not general issues. The right place where that information is taken is to NCA so solicit their views. On AHP, kindly note that Affordable housing is not synonymous to cheap or poor quality. So any poor development whether by Chinese, Locals or any other developer irrespective of their orientation, or where they come from will erode the confidence of the public in the program,” said Mr. Hinga.
Owing to the fact that Chinese developers are moneyed and come armed with readily available design structures, Munene says they have managed to by-pass all these procedures with some of the projects often going unchecked by the National Construction Authority (NCA).
By law, the NCA is mandated to regulate, streamline and build capacity in the construction industry, the authority also registers projects, provides supervisors and workers accreditation and also does contractor registration.
But the body continues to bear the brunt of a ‘toothless watchdog’ owing to the fact that the authority lacks the mandate to prosecute some of the cartels and corrupt officials involved in shoddy construction projects in the country.
Efforts to reach the authority’s Chief executive for comment bore no fruit as his phone calls went answered.
Other factors being blamed is unavailability of improved building code of regulations – currently awaiting gazettment. There have been several attempts by the government to institute a revised building code of regulations that allows the adoption of new building technologies that can significantly lower construction costs.
The government is determined to discard the 1969 Kenya Building Code that has long outlived its usefulness. The British Standards and Codes of Practice has been used for structural engineering practice in the country and will be abolished in favour of new European construction guidelines.
“We are on course and hopefully this will help address some of the challenges that have for a long time affected the sector,” commented Moses Nyakiongora, Chairman of National Buildings Inspectorate in a previous interview – who sits at the sector’s parent ministry.
But before such arrangements are made, experts are warning that such developments will continue to fill Kenya’s skyline.
Wealthy Chinese names such as Chinese billionaire Zeyun Yang, for example through his private firm Edermann Properties, is compiling a burgeoning portfolio of over 4,000 properties in the Kenyan capital Nairobi and connected seaport of Mombasa.
Located in Nairobi’s central-east district, the development will offer 2,720 high-rise apartment units in 8 separate 34-story apartment blocks. The towers will form a 2.3-hectare gated community which will be accessed from downtown Nairobi via a pedestrian bridge.
Upon its completion later this year, the River Estate will become the second tallest housing complex in East Africa, behind Mark Properties’ “Dubai-style” Le’mac Towers.
There are 18 buildings that stand taller than 80 metres (260 ft) and several under construction. The tallest building in the city is the new 32-storey, 200 metres (660 ft) Britam Towers. The second-tallest building in the city is the 33-storey, 163 metres (535 ft) UAP Tower. The most recent skyscrapers to be constructed are Prism Tower, Le’Mac and FCB Mirhab Tower.
There are nearly 400 Chinese construction firms in Kenya alone, and an estimated 10,000 firms on the continent, according to a 2017 study by the global consulting firm McKinsey & Company.
Atleast 20 skyscrapers, boasting a shopping destination that stocks Chinese and other global products are expected in the country with plans to build a self-controlled pseudo-urban enclave of operation.
Konza Techno City, a $14.5 billion development aimed at becoming the place where “the African silicon savannah begins”; the other being Machakos City, promising dozens of skyscrapers and acres of suburban homes.
All of them are related to Kenya’s Vision 2030 development plan, but it is not clear whether they will co-exist or be in direct competition.