Building Smart and Affordable Real Estate

Building Smart and Affordable Real Estate

From financial services to farming, technology has upended nearly every major industry globally. Real estate has not been spared this disruption even as it continues to contribute significantly to global and national level GDP of various countries. It is the bedrock of urbanization and has created immense wealth. Its industry nature is local in character, extremely cyclical, and often characterized by information asymmetry and lack of transparency.  It therefore stands to reason that technological disruption in the global real estate industry is likely to have an unprecedent waves through all other sectors of a country’s economy. The questions however, still stand? What is the form and nature of this disruption in real estate? How can real estate players expect the unexpected in technological evolutions and adapt accordingly? In one of the most colossal underestimations in business history, Kenneth H. Olsen, then president of Digital Equipment Corporation, announced in 1977 that “there is no reason for any individual to have a computer in their home.” The explosion in the personal computer market was not inevitable in 1977, but it was certainly within the range of possibilities that industry experts were discussing at the time. While disruption creates opportunity, it is only firms that readily adapt to the ever-changing situations that thrive. This is a fundamental principle in doing business and it is also important for any firm to not only be clear in what market segment they play in, but to also focus on how to be the best in that segment.

Creating the Future:

Home ownership is an integral of an individual’s dream of success, but for many young people today, especially, in the African and more specifically Kenya, it’s an unattainable dream. According to statistics by the World Economic Forum (2017) one third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations did — about 45 percent during their first decade of work. This leaves little money left over for savings, much less for home ownership, the largest financial expenditure of most people’s lifetimes. Now, imagine if people could design and develop their dream homes simply by going online to find the solution that best suits their means and lifestyle. Imagine being able to pick from a menu of standard designs and being able to customize fittings, furnishings, and smart equipment. Then imagine being able to use a digital interface to obtain quotes from vetted contractors for everything from surveying the plot to assembling the house. And the pieces of the house itself arrive in the form of prebuilt panels and modules in a container from a centralized robotic factory. This is in part the future of delivering affordable housing, under an umbrella term known as “industrialized delivery systems” and these will play a crucial role in the future of the construction sector. In reality, early versions of this future already exist, with the digitization of the land registry, which is the beginning point of all home owners dreams; purchasing a piece of land.  Additionally, the disruption will naturally flow into the approval process in NEMA, NCA and at county council level. Compared to the business registration process which used to be solely undertaken by advocates and has now been decentralized through the E-Citizen portal, the construction approval application process will in the foreseeable future be decentralized as well. Going forward, we are likely to see the creation of standardized home-building platforms, with developers working with an ecosystem of companies providing an array of fittings, furnishings, and equipment solutions. The result is a seamless customer experience and a more sustainable end product. The increasing need for affordable housing is driving some creative tech-enabled solutions.  The segment of affordable housing is recession proof and if the economy weakens, the need for more affordable housing will only grow.  The next frontier in real estate technology is as boundless as it is exciting with a whole new generation of innovative solutions from the ground up to address our growing demands for affordability, community and flexibility.



Allan Mutuma,

Senior Research and Corporate Finance Associate at Centum Real Estate

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