The National Social Security Fund (NSSF) is planning to built 30,000 homes in Machakos County to cash in on the high returns of the Kenyan real estate market.
The multi-billion project, which will be located on a 960-acre piece of land in Mavoko Municipality, will be NSSF’s largest investment in the property sector.
President Mwai Kibaki in a speech read on his behalf by finance minister Njeru Githae during the Monday’s NSSF AGM said the fund’s housing plan has been selected as one of the flagship projects under Kenya’s Vision 2030.
“It is commendable that NSSF will shortly embark on developing 30,000 houses, complete with infrastructure that is set to transform Mavoko into a city within a city,” said Kibaki.
NSSF is yet to give time lines or value of the project, although Acting Managing Trustee Tom Odongo had earlier told reporters that the fund was looking for a joint venture partner willing to invest in the local property market.
“We did an international tender last year, but our options are still open as we are yet to finalise the process. I cannot tell you how much it will cost at the moment,” Mr Odongo said.
People familiar with the housing project say the government-backed workers’ retirement fund is seeking joint venture partners due to the huge financial requirement of the project and the need to meet Retirement Benefit Authority’s (RBA) requirement capping real estate investments by pension scheme to 30 per cent of their assets.
“Our investment in property development is regulated by the RBA, which stipulates a maximum of 30 per cent of assets in real estate. If we were to embark on this project solely we would exceed the 30 per cent limit,” said a senior NSSF official on condition of anonymity.
Under the joint venture, the NSSF will provide land – which is valued at about Sh2 billion – and in return it will earn capital gains from the sale of the houses or earn rental income.
NSSF is a leading investor in the local real estate sector – holding an investment portfolio worth billions of shillings in both commercial and residential properties.
Some of its major investments include the multi-billion Social Security Building at Nairobi’s Community area, Hazina Trade Centre (which houses Nakumatt Lifestyle), Bruce House, NSSF House and the Mountain View estate in Kangemi.
The fund is currently developing 1,581 units in Nyayo Estate Embakasi Phases IV & V. The houses, which are scheduled for completion this year, are available for sale through cash, tenant purchase scheme and mortgage arrangement.