Arrest this development?

Ngong road as seen through the distinctive red hoops that adorn the facade of The Greenhouse, anew multi-use building in Nairobi, Kenya. (Brendan Bannon)

A view of new apartments through the shrouds wrapping one of Nairobi’s under-construction shopping centers

Mike Pflanz offers a personal view on Nairobi’s construction boom, and what it could mean for the city’s future.

WOODLEY, April 13, 2011 (Daily Dispatches) – The face of this young city is undergoing radical plastic surgery. In what the media here never fail to call “the leafy suburbs”, 1930s stone-built bungalows behind manicured hedges are being torn down and multistory apartment blocks rising high in their place.

Out on the upgraded highways snaking into the city, red tiled roofs stretch across acres of what was once empty grassland tended only by Masai cattle.

Malls are morphing from charming clusters of family-owned grocers and butchers, where everyone knows your name, into many-outlet monoliths to Mammon.

At well-to-do dinner parties, this is a constant topic of slightly disapproving conversation. Think of all the traffic. Have they upgraded the sewer pipes and the water supply? How will the electricity grid cope with all this extra demand?

For Nairobi’s mushrooming middle-class, however, that’s beside the point. They have money (credit?) to spend, and developers are answering their call. In one five mile stretch leading from the city’s west towards its center, there are now seven major shopping centers. Branch a mile off that road, there’re three more.

Two malls are brand new. Others are undergoing significant upgrading, more than doubling their outlets, bringing in casinos, smart new restaurants and cafes, high-end shops.

It’s not just the shopping. Demand for decent housing for the increasing numbers of salaried staff, the people jamming the malls each weekend, has far outstripped supply.

So, in fact, has demand for all housing that isn’t illegal, walled and roofed in tin, and far from water and electricity grids.

To house the huge surge in the city’s population, 150,000 new units must be added to the housing stock each year. Currently, the number’s closer to 12,000 – a deficit of almost 380 sorely-needed homes a day that are not being built.

A plasterer at work in Nairobi. He is part of a construction crew working to finish The Greenhouse, a retail and office development. (Brendan Bannon)

A plasterer at work in The Greenhouse, a new retail-and-office center in Nairobi

The problem is, according to architects and urban planners I have spoken to, most of these 12,000 new properties are aimed at those at the top point of the pyramid of the city’s wealthy few.

The numbers back that up. The country’s average wage (for the minority who earn a wage) is somewhere around $4,500 a year. But the average mortgage was more than 12 times that, at $56,000. That’s the highest ratio in Africa.

With high interest, very few can afford that. An architect I was chatting to yesterday told a story of a friend’s young cousins, both recently hired by Microsoft here, for whom it would be years before they could buy one of these swanky new apartments, in compounds with swimming pools and gyms.

Many others will try, however, raising fears of a micro-copy of the boom and bust in the US which led to the financial crisis.

And even behind the numbers, there are other worrying pitfalls. Nairobi currently has no urban plan.

There was one, once. There have been two, in fact, in 1948 and in 1973, either side of Independence from Britain in 1963. The latest expired in 2000. Both are widely criticized for ghettoizing people according to their income (or, in the earlier British version, their skin color).

The fact that there’s no central plan in place to manage the city’s current headlong construction rush means that there’s little regulation, little attention to aesthetics, and no demand to include open space around new developments.

There’s also no real Building Code to which technicians can refer to ensure new homes meet standards.

There are, simply, no enforced standards. Developers reading this will complain that that’s an exaggeration. I don’t know, guys, it was the director of planning at Nairobi City Council, Patrick Odongo, who told me that.

Then there’s the stuff that makes a city function. Take the water supply. Some 40% of the 450,000 cubic meters supplied to the city each day goes missing, stolen or leaked through poorly-maintained pipes, Mbaruku Vyakweli, director of communications at the Nairobi Water and Sewerage Company, told me.

Construction workers placing the distinctive red rings that adorn the facade of The Greenhouse, a retail and office development in Nairobi, Kenya. (Photographer: Brendan Bannon)

Workers fix distinctive decorative hoops on the outside of The Greenhouse

Or the electricity, hit on too many days by power cuts which stall business and leave home freezers slowly thawing.

Roads? There’s a massive upgrading program going on, which will make it easier for commuters living outside town to avoid jams. For the rest, whose homes are along the single-file lanes bisecting the “leafy suburbs”, gridlock is increasingly a reality, not an over-used phrase to describe a minor jam.

None of this seems to be slowing the pace of construction, however.

Down in Nairobi’s city center this morning, hundreds of property developers and their marketing minions will gather for the launch of a four-day Home Expo, where architects’ models in glass displays will tempt investors and potential owners alike.

The newspapers are littered with colorful advertisements for new 2, 3, or 4 bedroom apartments – Villa Maria, Chiluma Apts, Bellcrest Gardens, River Gardens. Prices? An average $201,951.

Where, really, is the money coming from to build and then to buy these places? I’ve heard many answers, the wildest of which is that all these apartments are being funded with ransoms collected by pirates in neighboring Somalia. I’ve done the math. It doesn’t add up.

The more prosaic explanation is that Kenya’s banks, freed from being forced to fund the government, now have money to offer in retail loans to personal account holders. At the same time, the country’s relative stability means its international credit rating has improved, allowing for more borrowing.

Finally, the country’s richest few, and its many living in the diaspora overseas, feel far more confident than in the past to save their money here not abroad, and to plow it into home-grown investments.

All well and good. But we’re talking here, as I said earlier, about the very top of Nairobi’s pyramid. What about the growing millions maybe a generation out of the slums, earning a salary, but a low one, with little history with their banks?

Very recently, there appears there’s been a shift. The demands of this massive market, winning access to mortgages from expanding microfinance institutions, are suddenly being addressed.

A mason at work in Nairobi, Kenya. He is part of a construction crew working to finish an expansion of The Junction shopping center in Nairobi, Kenya. (Photographer: Brendan Bannon)

A stonemason at work on a construction site in Nairobi

They’ll struggle for years to afford the near $200,000 prices of the swanky blocks close to the city center. But out on those highways, the homes beneath those red-roofs paving Masailand could soon be theirs.

Several firms have broken ground on what one architect calls “low cost, high life” developments. For example, Jericho, the Kenyan-Israeli-British team building one of Nairobi’s swankiest shopping-and-office centers, The Greenhouse, are next focused on Sunset Boulevard.

This is a complex of 2,024 budget apartments out beyond the international airport, where costs range from $24,000 for one bedroom, to $48,000 for three.

With improved rail links into the city, and an upgraded road, these plots are increasingly attractive to those yearning to clamber onto the first rung of the home-ownership ladder.

Efforts are even being made to ‘decongest’ the slum areas themselves, as international donors plow money into basic apartment blocks, connected to water and power, where rents are – in theory – controlled.

Where all this leaves us, if we peer into the crystal ball of the future, is hard to judge. In a dream world, light rail systems will snake into town, leaving roads clear. New building standards will ensure a greater proportion of new developments are given over to green space, not concrete jungles.

The middle-class, still expanding, will have access to value-for-money credit, and will be paying mortgages on their dream homes, light years from the tumbledown shacks in which their grandparents lived.

In reality, the prognosis is bleaker. There’s the risk of the credit boom forcing a burst in the bubble we’re seeing now (some I talk to tell me that won’t happen, though). There could be repossessions, negative equity, thousands forced back down the ladder by several rungs, or thrown off it altogether.

The snail pace of regulatory reform will mean that it will be years, possibly decades, before the construction industry is properly scrutinized. The long-term impact of corners cut now is simply unknown.

And, in the meantime, the cranes keep on turning, the scaffolding keeps on rising, and Nairobi, unsure even of how it will look afterwards, keeps on going under the plastic surgeon’s knife.

Related: Brendan’s full-size images of Nairobi’s construction boom.

© DAILY DISPATCHES: Nairobi 2011

6 Responses to “Arrest this development?”

  1. Dear Mike,

    Great article and wonderful, precise and well documented analyses of the all real estate and construction issue.
    One cannot agree more with the analyses of the potential damages caused by the lack of urban planning, and by the speculation of financial resources that instead of bridging the social gap will, instead increase it.
    Very possible and even more dangerous the possibility of the bursting of the “bubble” with disastrous consequences on the country/region economy (as it happened a couple of years ago in the US and we are all still paying the consequences of).

    Nonetheless I think we should also take in consideration some other factors to be completely honest with ourselves and, by default, with the readers:
    1) We can’t think to keep African cities in the diorama of the old “leafy suburbs”. What is happening here (I live in Nairobi as well) is what happened to the european cities 40, 50, 100 years ago. Incidentally, I remember that I could see sheep from the terrace of my apartment in Rome when I was a child (30 years ago).
    2) The sudden booming roads development is a new phenomenon due also (maybe mainly) to the recent coming into play of Chinese investments, construction business, road projects etc..(they are now in fact venturing more and more in the housing business).
    3) Until today the billions of dollars poured into African countries from the Western Governments, aid Donors, NGOs and the UN were often:

    a) not sustainable

    b) addressing topics separately rather than holistically, missing in so doing the “big picture” of development as one continuum rather than the “solution” of small apparently separated problems

    c) the most part of the funds “donated” went back to where they were coming from (high salaries for expats consultants, logistics and administration costs, hiring of western firms etc. (same thing is happening with the Chinese I guess)

    and, finally

    d) very rarely (if ever) the projects implemented by the above mentioned institutions addressed the issue of development in Africa, through the construction of road and railroads networks (the most ancient and effective way to promote development from the “vie consolari” built by the Romans 2000 years ago (Cassia, Appia etc.), until the “conquest of the west” in North America).

    As journalists and reporters socially engaged we do have the duty to point out where “the trouble” is (as you very effectively and professionally have done), but we also have to see how we arrived at the point where we are, being ready to share the responsibilities as much a the views.

    Respectfully,

    Giulio D’Ercole

  2. Nicholas says:

    Must say I liked reading the article. Plus Giulio’s comments. The analysis is very objective and points out some things that I did not even know myself as a resident of Nairobi. It has to be said that most of these developments have the potential of turning Kenya into a ‘second-world’ economy according to the government’s economic blueprint, Vision 2030. However, real danger exists that can (will) sabotage the progress towards these goals. Its all here: “The fact that there’s no central plan in place to manage the city’s current headlong construction rush means that there’s little regulation ….”
    Plan. I believe we are currently building on a planning foundation that is for the most part flawed. Essentially, anyone can build anywhere, anyhow, provided they can get the approvals. ‘Get’ here usually means bribing a government official, architect or local council authorities. This, in my opinion, may be a ticking time-bomb waiting to explode away with all the good progress we may have made.

  3. Juliet O says:

    Mike, I think this is my favourite dispatch so far. What worries me most is:

    1. That our children will grow up without open spaces to play in. And you know what, many of the new private schools don’t have green spaces either. They pile the kids into buses and take them to hotel pools for swimming lessons, or to another, better endowed school for field games. C’mon, what’s a school without a playground?

    2. You’re right, there is no building code. And in a society like ours, where cutting corners and corruption are almost expected, you can be sure that many of the highrises being built… are simply not up to code. A few buildings have come crashing down in the past few years. That’s scary. Those are the houses we’re living in, you know. That we’re raising our children in. How do we know which houses are safe to live in, to buy. That’s a terrifying thought.

    Keep ‘em coming!

  4. anthony says:

    Your article is spot on there loads of issues that need to be addressed because there so many swanky apartments going up but the load on the sewer system and grid are not being addressed.

    I actually did my architecture thesis paper a few years back on nairobi and believe if there was serious politcal impetus to get systems in place.An overall urban development plan is key going forward.

    The end users in these apartments will have water shortages.I bare to imagine the services loads brought about by the mushrooming appartments in the kilimani/milimani area that were previously bungalows.

    Not to forget that we should also adopt passive building methodologies that involve well intergrated renewables and not just cosmetic addittions.

  5. tovutisanifu says:

    Great article about the construction boom and high prices of apartments in Nairobi.

    The source of money for the houses may not be retail loans to personal account holders as there are less than 20,000 mortgages in Kenya, according to the Central Bank of Kenya.

    A friend recently offered an explanation that apartment blocks may be a way for people who receive huge windfalls of cash, through dubious means, to launder it. A possible reason why there are many empty units in apartment blocks, in a city without adequate housing.

    My forecast for Nairobi is that traffic gridlock, increased availability of services (hospitals, schools, supermarkets like Nakumat, telephone, Internet, satellite TV, radio etc.) in other towns will lead to an exodus out of Nairobi in the coming years.

  6. Jenny L. says:

    The article written very well. It is unfortunate that the people of Nairobi are not getting any consideration when they live near these shopping malls. The buildings being erected with out any type of code to protect the people is horrible. It seems like it might be a trap for people that work hard to save their money for an apartment. The rush in construction does not only endanger people but also could lead to building that will not last and end up costing more money in the future.