Real Estate Journal Kenya

Real Estate News, Stories, Reviews


3 issues facing Building and Construction in Kenya

Building and construction in Kenya have been facing some challenges, more over the past 10 years. Challenges like abandoned or unfinished developments, collapsed buildings, contractors abandoning work or the government demolishing houses. These challenges are a result of some issues in the sector which are not being addressed or which are not yet addressed properly.

In this article, we want to see three issues facing building and construction in the Kenya sector which have led to the consequences like unfinished developments, collapsed buildings, contractors abandoning work or the government demolishing houses.

1. Lack of adequate funding

Real estate section’s main issue is the lack of adequate funding for real estate projects. Whether the project is for a residential or commercial project, in one way or another, you will find that funding is an issue. Funding building and construction projects globally will face resource limitations. In our case, there are a few possible reasons why these limitations exist.

(a) Lack of adequate funds to carry out a project

Those undertaking real estate projects do not pool enough resources to do the projects they undertake. This leads to frantic cost minimization measures which sometimes may interfere with the quality of the final product.

(b) Limited funding by financial institutions

Financial institutions like banks, microfinance organizations as well as Sacco’s also offer stringent financing criteria which makes it in most cases disqualify the majority of the applicants or reduces the amount individuals would qualify to apply.

(c) High cost of borrowing

The cost of borrowing in the country is a deterrent to many people who would want to borrow. The cost you incur to secure funding plus over 15% annual interest is a hindrance to many people. Some organizations offer funding at a cost of 20% per annum and mortgage loans at an annual rate of 18%. This makes borrowing difficult coupled with the fact that the repayment period is also 5years and below for many financial institutions.

2. Unprofessional conduct by contractors and government agencies

The other challenge is the conduct of some contractors and officials of government agencies dealing with the approval of construction projects. Some contractors who are not registered engage in practices which injure the reputation of other contractors or injure the sector.

Some officials of government agencies also don’t do their work leading to houses being built in areas which should not have developments, approving projects with issues, failure to visit construction sites and ensure adherence to the law is achieved and so many things.

Developers must take a deliberate steps to ensure they work with registered contractors and that the due process of project approval is followed however costly and time-consuming it may end up being.

3. The use of Sub-standard Materials

Construction materials are not having enough quality. To be able to achieve a quality and durable project, you must be deliberate on the materials you use.

Some suppliers are supplying substandard materials at the cheaper amount to win contracts. You need to be careful not to be lured with low cost of materials but also by the quality and durability. You as a developer to work with your contractor closely and ensure you don’t encourage cheap materials on your project which are not durable.

Are you looking for a construction company, talk to West Kenya Real Estate Ltd.

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