Government seeks Sh9.2 billion from private sector to build 2,500 homes in Stoni Athi

In a bid to address Kenya’s housing deficit, the government is turning to private sector investments, seeking to raise Sh9.2 billion to develop 2,820 affordable homes in Machakos County’s Stoni Athi Estate.

This marks a crucial step in its ambitious plan to construct at least 250,000 housing units annually under the Affordable Housing Programme.

The first phase of the Stoni Athi affordable housing project is expected to mobilise private sector funds as part of the Sh70 billion that the government aims to raise through the public-private partnership (PPP) model in the 2025/26 financial year.

"Government envisages mobilising Sh70 billion within the next Financial Year 2025/26 through private investments in PPPs by working with the private sector to develop projects in priority areas," the 2025 Budget Policy Statement (BPS) from the Treasury reads.

The 23-acre land for the development, situated along Mombasa Road, belongs to the National Housing Corporation (NHC), which is the contracting authority for the project.

The NHC plans to develop 10,500 houses on 150 acres in Athi River, with 5,000 units earmarked as affordable housing and the remaining 5,500 as medium to high-end units.

Share project costs

Under the PPP model, the government and private sector will share project costs. Since the land is already owned by the NHC, private developers will only bear construction costs and related amenities.

The government is also expected to provide physical and social infrastructure, including roads, electricity and markets, to enhance the appeal of the housing units to potential buyers or tenants.

Currently, the PPP portfolio has 37 projects at various stages, with Stoni Athi being the only housing initiative.

Kenyans, particularly salaried employees, have been contributing an affordable housing levy of 1.5 per cent, matched by their employers, to fund President William Ruto’s housing agenda.

The NHC has already issued a request for qualification (RFQ), inviting interested parties to submit applications, with the pre-qualified bidders proceeding to the next stage.

"The contracting authority intends to pre-qualify suitable applicants who will be eligible for participation in the bid stage, to award the project through an open competitive bidding process," reads the NHC in the RFQ, which closed on January 25.

The selected developer, or project company, will be responsible for constructing both affordable and market-rate housing units. A portion of the 2,820 affordable housing units will be handed over to the NHC upon completion, while the project company will retain the remainder, along with at least 200 market-rate units.

Half of the affordable units will be one-bedroom apartments, while the remaining units will be divided equally between one-bedroom and two-bedroom apartments. Prices for the affordable units will be determined based on a criterion set by the NHC.

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"The contracting authority will not prescribe or regulate the price at which the market-rate units are sold," the RFQ document adds.

Government data indicates that an access road to the Stoni Athi project site has already been completed at a cost of Sh120 million.

The development forms part of the Sh20 billion Stoni Athi Waterfront City initiative, which envisions 10,500 housing units catering to low, middle, and high-income earners across 150 acres.

As early as 2015, the NHC had announced plans to float a Sh5 billion housing bond at the Nairobi Securities Exchange (NSE), with some of the funds intended for maisonettes in Stoni Athi and flats in Mombasa.

Currently, around 78 affordable housing projects are at various stages of development across the country. However, only a few have been fully completed, including Buxton Point in Mombasa and Bondeni Affordable Housing in Nakuru.

The affordable housing programme also includes housing for military personnel, police officers, correctional services staff, student accommodation, and private sector developments.