CFC Stanbic Bank draws homeowners to city’s outskirts

CFC Stanbic Bank is casting its net for mortgages to the city’s outskirts, targeting potential borrowers who cannot afford decent housing due to the high asking prices in areas close to the Central Business District.

High property prices have made it difficult, even for high net worth individuals, to raise enough money for their preferred homes reducing the uptake of mortgages offered by lenders.

“Property prices in Nairobi are just too high,” said the bank’s home loans manager Peter Ondieki.

The 2009 Hass Property Index showed that prices for fully furnished apartments in Nairobi targeting high-end income earners oscillated between Sh15 million and Sh20 million, far from the reach of a majority high income earners whose monthly take home is Sh100,000.

The bank has traditionally targeted high income earners.

Previously, the minimum amount which it loaned out was Sh5 million but this has reduced to Sh3 million and Mr Ondieki says that it is outside of Nairobi where borrowers can take the best advantage of the mortgages.

Residences around the CBD have been crowded out by commercial buildings.

Upper Hill for instance, has changed from a middle class residential area and is now a fledgling financial centre housing the headquarters of banks such as Equity and CBA.

Satellite towns, on the other hand, have residential property markets that are blossoming due to affordable land prices and this is catalysing the shift to these areas. These towns include Athi River, Kitengela and Ruiru.

Daniel Ojijo, a property developer with Mentor Group Ltd, says that the Sh3 million is still not enough to get two or three bedroomed house even in these satellite towns.

“Even in these areas you need at least Sh4 millions,” says the property developer.

The steep costs are the result of the high prices of materials, high financing costs and poor infrastructure he adds.

Developers in these areas are being forced to buy biodigesters as a result of municipalities not being able to provide water and sewerage services.

The costs of the biodigesters, which can run up to Sh20 million, are eventually pushed down to the home buyer.

The only reprieve for potential home owners has been the amendment to the Building Code which now permits pre-fabricated housing.