Housing Finance sets aside Sh1.4bn for house development

Housing Finance

Housing Finance’s HQ in Nairobi CBD

Mortgage lender Housing Finance has set aside Sh1.4 billion to fund the development of residential houses on its own or through joint ventures with land owners.

The allocation of 46 per cent of the Sh3 billion Housing Finance expects to raise through a corporate bond is a strategic move aimed at earning the firm a higher profit from the entire home supply chain.

Samuel Waweru, the company’s finance manager said, “Our focus is in getting involved throughout the home supply chain to ensure that the market has the kind of homes our target customers can buy.”

According to Waweru, property developers tend to price their homes way above what most mortgage buyers can afford, thereby denying Housing Finance many business opportunities.

Data from various real estate firms show that in the past five years most housing projects around the country have been attracting wealthy buyers – who often buy homes in cash, at a discount.

Through the Kenya Building Society, its recently revived property development subsidiary, Housing Finance is also hoping to rake in profits from the margin accruing from the various steps in the house supply chain.

The lender is using the subsidiary to develop a mixed-use estate dubbed Komarock 5A, which comprises 162 residential units and a commercial centre in Nairobi’s Komarock estate at a cost of Sh800 million.

The firm plans to sell the houses at 15 per cent below the market value to pull in low and middle income earners currently faced with high credit costs.

Housing Finance has already signed join venture projects in Kahawa and Rituta where the firm is a 50:50 partner with the respective landowners in both projects.

In Kahawa along Thika Road, the lender is putting up a 220-unit housing project to be known as Kahawa Gardens, while a 414-unit apartments project dubbed Precious Gardens is underway in Riruta area.

HF managing director Frank Ireri told journalists in a past interview that the lender’s re-entry into the house construction business would be critical in diversifying the firm’s revenue streams and reduce reliance on interest income form the mortgage business.

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