Fretting over the volatility of the stocks market, Britam Holdings is shifting focus into the property market in a bid to shore up its revenue.
The insurer has embarked on construction of 11 floors of fully furnished and serviced apartments in Kilimani, Nairobi, as it seeks to cash in on the rising demand for non-hotel based accommodation among business tourists visiting the city.
The project, which will be built a cost of Sh3.3 billion, comprises 117 two-bedroom and 46 one-bedroom rental apartments located on a 1.6 acre piece of land on Nyangumi Road in Kilimani.
The project is being undertaken by Britam Properties, a subsidiary of Britam, and it is earmarked for completion in 2020.
At Sh12,000 to Sh20,000 for a two-bedroom unit and Sh8,000 to Sh12,000 for a one-bedroom unit a night, the development looks quite promising considering that Nairobi is positioning itself as the regional business hub.
Britam managing director Benson Wairegi said the company’s decision to venture into property development is part of its diversification strategy meant to lower portfolio risk and exposure to the stock market.
Mr Wairegi noted that there was a huge demand for serviced apartment in Nairobi yet the supply of the facilities remains quite low.
“The market will need at least 1,000 serviced apartments in the next three years and Britam Properties will help in bridging this gap,” he told guests who attended the project’s ground breaking ceremony last month.
Meanwhile, Chinese property firm Ahcof Investments (Kenya) Limited has announced plans to build a 10-floor high-end residential complex on Mbaazi Avenue in Lavington, Nairobi.
In its regulatory filings, Ahcof Investments says the proposed development will consists of three blocks of apartments – two blocks holding 40 two-bedroom apartments each, and a third one hosting 80 units of high-end apartments.
“The (development) will increase urban housing facilities, increase land use and improve local living standards,” Ahcof says in its environmental impact assessment study submitted to the National Environment Management Authority (Nema).
The Sh522 million development will sit on a one acre plot and will make use of storeyed facilities to enable the built-up area to occupy 35.5 per cent of the land while an on-ground parking bay has been reserved for 130 cars. Additional 56 parking lots will be provided on the mezzanine floor.
Ahcof is the developer behind the Astoria Apartments in Lavington.
Cash-rich companies are diversifying into property and real estate development in a bid to meet the rising demand for housing in the country, which stands at about 200,000 units a year against a supply of less than 50,000 units annually.
There are concerns, however, that developers are keen on building homes for the high income groups at the expense of the lower income earners who form the bulk of the local citizenry.
The rapid construction of homes for the upper class has brought about a glut of apartments at a time when demand among the target market is declining.