Affordable housing: new construction technology bringing costs down

JLL Sub-Saharan Africa’s (SSA) Strategic Consulting team have been investigating the ongoing status of affordable housing in the SSA region. Article 3 will focus on exploring and highlighting some new technology and innovations which are reducing construction costs impacting housing affordability across different SSA markets. While our intent is to cover the whole Sub-Saharan African region, the countries upon which we have focused our analysis are primarily South Africa, Kenya, Nigeria, Ghana and Tanzania.

March 07, 2018

According to benchmarking data from the Centre for Affordable Housing Finance in Africa (CAHF), construction costs are the largest component in the total cost of housing delivery across the SSA region, ranging between 41% and 72% among the above-mentioned markets. Based on this data, we have estimated the following current construction costs per square metre: South Africa (USD 425) Nigeria (USD 696), Ghana (USD 627), Tanzania (USD 460), and Kenya (USD 569). With construction costs accounting a significant portion of the total housing delivery cost, this article will highlight some of the new technology and innovations which are reducing construction costs within the housing sector across different SSA markets, with a key focus on construction methods and alternative construction materials.

As more private firms step up to try reduce the high cost of construction, numerous innovative construction methods and materials have emerged. The application of innovative construction methods, the use of affordable materials, new planning and cost management systems have been introduced in an attempt to make housing more affordable and accessible to lower income earners across SSA.

*Current costs per square metre are estimated based on CAHF benchmarking data for the main city in each market.

Construction Innovation for Cost Reduction

1. ‘Cast in situ’ housing units

One South African-based firm has introduced an innovative alternative construction system that delivers concrete housing units that are cast in situ, using patented plastic-moulded formwork and a special mix of aerated concrete. Production of the formwork can incur a relatively high initial cost, however, due to its reusability, the modular formwork for one unit can be used to deliver up to 50 houses, potentially reducing construction cost and construction time in standardised large-scale projects. According to the company, the system has the potential to reduce construction costs by 26% to 35%, depending on market conditions, and based on previous indicative prices, we have estimated the current average cost per square metre for a basic housing unit to be USD 184 in the South African market.

2. Load-bearing steel frame units

Another manufacturer has introduced a modular construction system, in the SSA market, which combines the use of a load-bearing steel building frame with stone or insulated fibre cement walls. With the structure in place, building services such as plumbing and electrical systems, fittings and finishes can be installed separately, maintaining flexibility, and allowing for hassle-free changes to different structural components over time. The manufacturer reports that this building system not only reduces construction time and costs but that its unique roofing system allows for good ventilation and self-cooling of housing units.

3. Prefabricated modular units

In Kenya, some of the innovative solutions provided by companies in the local market include prefabricated housing units. The construction process involves the on-site assembly of standard sections of a house that were manufactured in a factory and then transported onto site. Prefabricated construction methods are estimated to reduce construction costs by 30% and according to the manufacturer, the price for a basic two-bedroom prefabricated housing unit in Kenya can cost about USD 167. The construction of prefabricated housing units often incorporates innovative construction materials such as expanded polystyrene (EPS) panels, galvanised steel and fibre cement. These materials are often less expensive to produce, per square metre, compared to conventional materials for clay brick or cement block walling. Other unconventional materials include compressed earth blocks which are made from a combination of soil and waste materials as well as compressed agricultural fibre panels which made from agricultural materials such as wheat and rice straw.

It is evident that the increasing use of innovative technology and alternative housing construction methods and materials in SSA is a welcome shift that could potentially lower construction costs by approximately 30%, while simultaneously improving quality and minimising environmental impact.

There are, however, a few barriers to the rapid mass roll-out of these alternatives. These barriers are highlighted below.

Barriers to Construction Innovation / Technology Roll-Out

  1.  Resistance to change and slow acceptance of new building technology by the public
  2. Lack of access to finance within the lower income segment seen as a risk
  3. Homogeneity and scale required to adequately lower construction costs per unit
  4. High initial costs for production of formwork and purchasing of materials
  5. Delivery of affordable housing perceived as a government-led initiative

Having previously highlighted how the constant rise in urbanisation rates has impacted the growing demand for affordable housing is a key concern at the forefront of local governments across SSA, the limited supply could be seen to present an opportunity for private firms that are dedicated to finding innovative ways to meet the needs of this largely under-serviced market segment.

Perhaps, an even greater opportunity to adequately realise the objectives of both government (public institutions) and private firms exists, through collaborative projects that efficiently meet the rapidly rising demand for affordable housing across the region.

Our next article on affordable housing (Article 4) will provide an overview of PPP (Public Private Partnerships) initiatives in the affordable housing sector in the region.

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