Understanding Decentralization in Real Estate
Decentralization, in the context of real estate, refers to the use of technologies like block chain, smart contracts, and fractional ownership models to disrupt traditional processes within the industry. These technologies offer the potential to increase transparency, streamline transactions, and open the door to new investment opportunities for individuals who might have been previously excluded from traditional real estate markets.
The Kenyan Model
Kenya's rapid urbanization has brought to light the glaring disparity in housing. Nairobi, the capital, alongside other urban centers, has experienced an unprecedented population surge, exacerbating the demand for affordable living spaces. The government estimates that the country faces a deficit of over 2 million housing units, with the urban poor being the hardest hit. Traditional centralized real estate models have fallen short in addressing this gap, primarily due to inefficiencies, corruption, and a lack of inclusivity in planning and execution.
The affordable housing initiative, a key pillar of the Kenya Kwanza coalition manifesto, is a prime example of a real-world push towards both affordable housing and decentralization. The initiative seeks to address the chronic housing shortage, especially for low-income and middle-income earners; by constructing thousands of affordable units across the country. This ambitious project involves collaboration between the government and the private sector.
The government provides incentives like tax breaks and fast-tracked development approvals, while private developers focus on cost-effective construction methods and innovative financing models to make homeownership a reality for more Kenyans. The government has created three entities to help with the implementation of the Affordable Housing Program (AHP):
- · Boma Yangu Portal: Promotes transparency and tracks program progress.
- · Kenya Mortgage Refinance Company (KMRC): Provides affordable home loans through banks and SACCOs.
- · National Housing Corporation (NHC): Oversees policy and project development.
The Affordable Housing initiative has been billed as a project that will solve the country's housing crisis. The overall target by the President is to construct 200,000 affordable housing units annually which will create between 600,000 and one million jobs each year.
Decentralization is central to this strategy, with the government empowering county governments to spearhead local housing projects. Furthermore, the government is exploring public-private partnerships (PPPs) as a viable solution to mobilize resources and expertise.
While the journey towards fully decentralized and affordable housing is challenging, the prospects are promising.The East African International Real Estate Expo 2024 will undoubtedly spark crucial conversations, inspire innovation, and foster partnerships that will propel the affordable housing agenda not only in Kenya but across the East African region and beyond. As East Africa strives towards a more inclusive and prosperous future, decentralization offers a powerful tool for unlocking potential and creating a more sustainable and equitable housing landscape.
