I would agree with Pundit and put this one in the noble-but-impossible category, although a great deal depends on where these "rural" areas are.
First, there is the emotional attachment to land. Many rural landowners can claim only a small piece of land. (It is usually small because it has been repeatedly sub-divided through generations and families.) But there is nothing like having one's land home-home. As an example, I inherited a small piece of land---ancestral land!---from my father. It is too small to be useful agriculturally, and all logic would support the proposed policy. But it is my land, and it is where I will be buried. So there is nothing that would make me ever sell it or have it made it into one large, amorphous farm, with somebody growing potatoes over my body.
Second, a lot of farming in rural areas is subsistence farming. Even if one has no regular income but has such land, one can always grow some maize and sukuma-wiki and keep going. What similar guarantees will people have with these vague "housing estates"? What exactly would the moved people do in these housing estates?
Third, where exactly will these "housing estates" be located and what would they be like? Considering some of these rural areas, I shudder to imagine answers. And if one is thinking of the existing town and cities, then I can readily envisage more slums and all that go with them. A part of Kenya's population consists of restless youth, cramming even more of them into yet "housing estates" is a recipe for trouble.
The way I see it, if the government wish to encourage some sort of rural-to-urban migration, then what it ought to do is provide better opportunities in urban areas; with that, the move will happen naturally. Housing is just one component---and the most basic one that---of what is required. Employment, more and better social amenities, ...., that sort of thing.
The policy seems to start on the basis that there is not enough land for the production of food. That might or might not be the case, but, surely, a good starting point would be to consider whether available land is being used optimally? E.g. what can be achieved (and at what cost) with irrigation of empty land, as opposed to such large-scale dreams?