Home Afrika bags Sh1bn deal to build houses in Nigeria
Home Afrika CEO Njoroge Ng’ang’a (left), chairman Lee Karuri (right) and Ministry of Lands PS Mariamu El Maawy in this file photo. They plans to issue corporate bonds to raise money to finance a majority of its planned projects. SALATON NJAU
What you need to know:
Home Afrika, which begun as an investment group or chama, became the first fully-fledged real estate company to list on the Nairobi Securities Exchange in June 2013.
The property developer also became the first company to list on the Growth Enterprise Market Segment.
Home Afrika has signed a Sh1 billion contract to build 200 houses in Lagos, Nigeria, marking its first venture outside Kenya. The listed real estate company said that it had entered into a joint venture with a Nigerian firm to put up the houses which will target middle class buyers.
Home Afrika chairman Lee Karuri said that the company will provide technical and financial input while its partner will provide land. “We signed the deal a few months ago and now we are working out how to implement the project,” Mr Karuri told the Business Daily.
The project will be financed by a combination of debt and equity.
Mr Karuri said that he could not give finer details such as the name of the partner at this stage. The company is eyeing Nigeria’s property market which, like Kenya, has a huge deficit and a growing middle class.
“The market is big and the housing gap is 17 million units in pent up demand. There is also a significant middle-class, spending power and availability of development sites,” said Home Afrika chief executive Njoroge Ng’ang’a.
Entry into the West African market was also made easier by contacts at the federal and national government levels, which were made during President Goodluck Jonathan’s Kenya visit last September. Prior to the visit, shareholders agreed to form Home Afrika International, a subsidiary that would be used to increase the firm’s footprint in other markets.
The company is also looking into opportunities in Abuja and other states. Property management firms say there is demand for both apartments and maisonettes in Nigeria’s major cities.
“There is a steady increase in enquiries for two to three-bedroom apartments and up to five-bedroom houses for purchase. Housing estates, in particular, are popular, not least because of the perceived greater efficiency of private developers in providing bulk infrastructure and services,” says Broll’s 2013-2014 annual report.
Broll also states that Nigerian developers share similar challenges with their Kenyan counterparts such as high land prices and lack of transparency when it comes to title deeds.
“Lack of available large parcels of land is viewed as a constraint to real estate development. Prime land is typically fragmented, and prices are high. Furthermore, there can be concerns about transparent land titles and ownership documentation,” says the annual report.
Home Afrika, which begun as an investment group or chama, became the first fully-fledged real estate company to list on the Nairobi Securities Exchange in June 2013. The property developer also became the first company to list on the Growth Enterprise Market Segment.
