Housing Principal Secretary Charles Hinga has reignited discussion after saying some of Nairobi’s strongest real estate returns are found not in affluent estates such as Kilimani, but in informal settlements.
Addressing the 4th International Research Conference, Skills Competition and Expo at Kabete National Polytechnic, Hinga said many investors misunderstand where real estate profitability is strongest.
He said high-end apartments in places such as Kilimani and Muthaiga may look profitable, but housing in slums can produce higher returns largely because tenants face steeper charges for basic services.
He said real estate players may assume Kilimani apartments or grand Muthaiga homes are the most profitable, but the highest returns in Kenya’s real estate sector are in slums.
According to him, informal settlements operate under arrangements in which tenants often pay more for essential utilities than those in formal housing setups.
He cited Mathare, Embakasi, Kasarani, Huruma, Kawangware, Kangemi, Dandora, Kariobangi, and Eastleigh as examples.
He said electricity in some of these areas is drawn through informal connections from nearby transformers, while landlords continue to charge tenants rates comparable to commercial tariffs.
Hinga added that residents in informal settlements can end up paying almost 140 per cent more for electricity than consumers supplied directly by Kenya Power.
He also pointed to water access as a major expense, saying households in these areas are rarely connected directly and must depend on vendors.
According to Hinga, the vendors often sell water at inflated prices, making basic access much costlier than in formal estates.
He said water is not supplied inside homes, and residents rely on water cartels and vendors who charge up to 175 per cent more.
Hinga also noted that sanitation is not free in some informal settlements, as residents must pay to use toilets and other facilities.
He described the situation as a ‘penalty of poverty’, in which low-income households pay more for basic services than wealthier families living in formal estates.
According to Hinga, these conditions are among the factors driving efforts to address the high cost of living in informal settlements.