Cytonn, Finnish firm break ground for Sh1bn Karen homes

Investment firms Cytonn and Taaleritehdas of Finland have broken ground on their first real estate project, Amara Ridge, worth Sh1 billion.

The two investment firms are putting up the high-end residential development in the Karen suburb of Nairobi on a five-acre parcel of land.

Amara Ridge will consist of 10 five-bedroom houses each with a sales price of Sh95 million. Construction is expected to be done over a two-year period.

Cytonn chief investment officer and head of real estate Elizabeth Nkukuu said part of the firm’s strategy is to target all segments in the real estate market.

“Our deal pipeline serves the various segments of the market ranging from the high-end, such as the Amara Ridge, to the middle to lower-middle income, which constitutes 85 per cent of our projects,” she said.

The two firms plan to roll out other real estate projects in Karen and Ruaka town of Kiambu County in the next six months.

Similar high-end residential developments that are have come up include the Sh1.3 billion Rosslyn Springs, a gated community of four-bedroom houses that is being funded by KenGen Staff Retirement Benefits Scheme.

READ: Finnish firm eyes Sh3bn investment in local real estate with Nairobi unit

Rosslyn Springs, which is coming up in the Rosslyn suburb of Nairobi, has 17 units with sales prices of between Sh79.7 million and Sh83.5 million.

Property consultants Broll Group says the high-end housing market is being sustained by investors who have expatriates and diplomats as tenants. Such tenants, however, take up houses depending on the quality of the finishing.

“The inflow of international companies as well as expatriates into the country will assist in the decrease of vacancies in the high-end residential market, however, these tenants/buyers demand high level quality finishes and fittings for both ownership and investment opportunities.

“Prices range between Sh55 million and Sh110 million depending on the type of residential unit selected, location and amenities provided,” said the Broll report for 2014-2015.

Buyers and tenants are also preferring gated communities since they have shared maintenance cost and offer better security.

For the mid and low-end of the market, where demand is heaviest, the biggest challenge is in availability of affordable housing.

“There is still a high shortage of low and middle-income housing priced below Sh2 million and between Sh4 million and Sh7 million,” said the Broll report.