Tanzanian capital Dar es Salaam’s real estate has been ranked ahead of Nairobi and Addis Ababa in the World Bank’s latest cities report, which cites land fragmentation and weak property rights as the sector’s biggest impediments in Africa.
The report, which was released yesterday, estimates the economic value of Dar’s real estate at Sh1.2 trillion ($12 billion) ahead of Nairobi’s Sh927 billion ($9 billion) – a Sh273 billion gap.
Ethiopian capital Addis Ababa comes in third at $6 billion (Sh618 billion), while Kigali (Rwanda) is fourth at $2 billion. Uganda and Burundi were not included in the study.
The World Bank report, however, describes Dar, Addis and Nairobi as having low economic/replacement values compared to cities with similar income levels.
“The low economic value comes from the way land is organised – in small fragments – reducing the scope to scale up investment in housing and commercial complexes. Small scale urban development increases cost of construction and makes it costly to lay down supporting services and infrastructure,” Somik Lall of the World Bank said, adding that there is need to clarify property rights – “because, in many parts of Nairobi, land is not utilised to its full potential.”
The report also urges Nairobi and Dar to co-ordinate land and transport development in order to create value.
“As you will see in cities such as Nairobi, the share of land allocated for mobility – is limited. This further reduces the extent to which the city can support economically dense structures.”
In Nairobi, for instance, commercial and industrial structures account for 55 percent of the total value of building stock — even though these structures occupy just four percent of the city’s area.”
“Residential development is urgently lacking,” it says, adding to a growing chorus on Kenya’s housing deficit of about 200,000 units annually.
Property development has more recently been seen as a safe investment bet in Kenya, making it a popular cash-generating option for investors.
This is evidenced by the numerous giant cranes on the city’s commercial districts such as Upper Hill and Westlands.
Property experts yesterday acknowledged that office space charges are higher in Dar at an average of $22 per square metre compared to Nairobi’s $12 – $14.
Credit: Business Daily