KCB to build Sh1 million homes for low-income earners

KCB chief executive Joshua Oigara. FILE

KCB chief executive Joshua Oigara. FILE

The Kenya commercial Bank (KCB) is planning to build low cost homes in various parts of the country in effort to diversify its service offering while expanding its sources of income.

The bank is planning to separate its mortgage lending arm S&L from its banking business – registering it as an independent company that will build lower cost houses for the emerging middle class.

KCB chief executive Joshua Oigara said S&L will by end of the year become an independent entity that can raise its own funds to develop affordable homes.

“What we want S&L to do now is shape itself as an independent entity of the company that builds affordable houses. We want to build 10,000 houses in the next three years,” Mr Oigara said in an interview.

“We will give it a chance to get its own capital, look for partners. Right now we are working with people in Brazil and Mexico to bring in seed funding for investment.”

The bank, which is yet to disclose the location of its projects, hopes to ride on new construction technology to build houses priced between Sh1 million and Sh3 million.

The lender expects to attract a significant number of mortgage takers who are currently priced out of the market. The average mortgage loan is Sh7.5 million – way out of reach for many Kenyans.

KCB, whose assets base stands at Sh567 billion, says its mortgage book is now worth Sh56 billion which is 14 per cent of the lender’s total loan book.

The lender appears to be following in the footsteps of Housing Finance, which has become a major player in the construction industry following the revival of its dormant construction subsidiary in May 2012.

The construction arm, known as the Kenya Building Society (KBS), has recently contributed significantly to Housing Finance’s profitability – following the completion and sale of several projects, including Komarock Phase 5A in Nairobi.

The firm, which is undertaking Komarock Phase 5B and the K-Mall, is set to embark on Komarock Phase 5C – which involves construction of 1,272 apartments. It also plans to build 240 apartments on Kamiti Road and another 1,100 on Thika Road.

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