Private Sector Housing Investments: An Analysis of formal Private Developers in
Nairobi, Kenya.
by
Cecilia Njoki Kinuthia
This study investigates the factors determining formal private sector investments in urban housing development in
Nairobi. It examines the significance of each of these factors to gross investment in housing by the formal private
developers in Nairobi. To analyze this, a residential developer behaviour multiple regression model is developed and
estimated using housing developer survey data from the formal private developers in Nairobi. Credit, cost of land,
institutional bottlenecks (plan approval procedures) and availability of infrastructural facilities are found to be
statistically significant in determining gross investment in housing by formal private developers in Nairobi. The other
factors tested for statistical significance but found to be statistically insignificant, are construction costs and profit
margins.
The policy implications of the study are; that the Government should constructively contribute to shelter provision and
more so specifically in three areas: providing land with secure tenure, because this is fundamentally a legal issue that
must be resolved in the public arena; assuring available infrastructure, which generally requires major capital
investment and involves both economies of scale and public health benefits; and assuring adequate credit, which is
intimately
related
to
national
economic
policies
and
the
system
of
financial
regulation.
The researcher concludes that most of the factors determining private investment in urban housing are administrative
in nature. Therefore, if the private sector has to play a significant role in housing provision, then it will have to link its
efforts with the public sector. The public sector in this case been an enabling agent.