In effort to diversify its revenue streams by tapping into the home development market, Housing Finance has signed joint venture agreements that will see the firm co-own housing projects with land owners.
The joint ventures will see Housing Finance and land owners jointly owning the projects, with the shareholding determined after both the value of the land and the cost of development are calculated by professionals.
“The joint ventures will enable us to profit from the lucrative home development market while helping individuals who own land but lack the funds to develop homes to unlock the value of their investment,” said Peter Kimeu, the head of project administration at Housing Finance.
The mortgage lender has so far signed joint venture agreements with two land owners in Nairobi to build apartments targeting middle income earners in Kahawa West and Riruta areas.
Sources privy to the agreements say that Housing Finance will invest Sh1.2 billion in the Riruta housing project, dubbed Precious Gardens, which will involve construction of 414 houses. On the other hand, the mortgage lender will foot the entire construction costs for the 200 houses in the Kahawa West project.
Housing Finance is looking sell the houses in both projects while the land owners will be at liberty to either sell or rent out their units.
The lender’s decision to return to the house development market is informed by the huge profits real estate developers are making thanks to a huge shortfall in homes supply, estimated at two million units.