The Institute of Budget and Devolution has advised that the government needs to set aside at least KSh. 50 billion to breathe economic life into the housing sector following depressed activity over the past three months.
Property developers, buyers and sellers have taken a hit on cash flows following the coronavirus outbreak, a situation that will make it hard for the sector to resume full recovery.
Elis Mbau, the institute’s director, said the country’s projected economic growth rate falls short of what the institute considers to be ideal (6%) for sustained demand, good cash flow and less pressure on credit markets.
The institute proposes the establishment of a revolving fund over the next two financial years to give zero-rated interest to housing cooperatives and provide heavy tax subsidies for the private sector if the government is to realize the affordable housing agenda by 2022.
He said the government’s affordable housing agenda was a noble initiative that should not be subject to restricted time frames due to the influence of unforeseen circumstances like COVID-19.
Over the past few weeks, some experts have warned that the real estate sector could face a liquidity crisis if the government does not pump enough money into the economy.
The latest Banking Sector Report by the Central Bank of Kenya shows that the real estate sector has received just a little over Ksh. 3.6 billion in terms of funding relief from banks, a far cry from the institute’s estimate of Ksh. 50 billion.
Meanwhile, the Architectural Association of Kenya has proposed that private and public buildings should be redesigned to accommodate the new operating realities presented by the pandemic in a bid to control the risk of infection.
“Office will witness more spaced out desks, the establishment of entry and exit points to deter regular interactions. Hands-free facilities from doors, water tap, soap dispensers and elevator buttons will become the norm. For restaurants, plexi-glass will be installed within the service area thereby reducing close contact between kitchen staff and waiters as well as buyers,” AAK president Mugure Njendu said.