Slum Real Estate: The Low-Quality High-Price Puzzle in Nairobi’s Slum Rental Market and its Implications for Theory and Practice

Summary This study of 1755 households in Nairobi's slums challenges the conventional belief that slums offer low-quality low-cost shelter to a population that cannot afford better standards. In Nairobi, slums provide low-quality but high-cost shelter. Although slum residents pay millions of dollars in rents annually, and better quality units command higher rents, very little is being re-invested to upgrade quality. To resolve the challenge that the Nairobi puzzle poses for theory and practice, we develop a new analytical framework for understanding quality of living conditions. Improving conditions in Nairobi's slums requires, we argue, two simultaneous interventions: alteration of the tenure mix to enhance owner occupancy and infrastructure investment.

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