Mhasibu sacco set to put up Sh500m complex in Nairobi

Sacco-owned Mhasibu Properties is putting up a multi-storey commercial building in the Kilimani area of Nairobi in a project estimated to cost as much as Sh500 million.

The commercial complex dubbed Mhasibu Towers is owned by the development arm of Mhasibu Sacco, a society whose core patrons are accountants.

The building to be located along Kirichwa Road will consist of two wings, a 12-storey and nine-storey tower. It is scheduled for completion in 2016.

The exact cost of the project that further cements the return of saccos to commercial office business is not known but its promoters estimate it at between Sh450 and Sh500 million.

“We are now in the process of tendering for contractors. Construction should begin within the next four to five months. The project should take two years,” Mhasibu Properties chairman Oliver Adera told the Business Daily.

The development will be financed through a mix of equity and debt. But the sacco says any borrowing would depend on how much off-plan space the developers can dispose of and the amount Mhasibu will raise from members now estimated to be around 7,000.

Mr Adero said the company will be selling shares in the property company at Sh100 per share, with the least number of shares a member can buy set at 500 translating to a minimum investment of Sh50,000.

Mhasibu has already invested in the residential property market with the 226 housing units it is constructing in Runda.

READ: Accountants Sacco in Sh2.3bn Runda housing project

The revitalised sacco movement that today controls billions of shillings has become a force to reckon with in the real estate sector, buying and selling vacant land or building houses and offices for sale.

It is a return to the old sacco ways of the first decade of Kenya’s Independence, but backed by strict regulation and new business models to avoid tying down cash.

The Sacco Society Regulatory Authority (Sassra) has carried out stringent enforcement of rules to avoid pitfalls of the earlier saccos.

Property management firms say areas such as Kilimani are at the ‘rising phase’, which is characterised by office space supply being less or at par with demand.

Mentor Group’s survey of commercial property in Nairobi released in February said Kilimani still has room for expansion as it has a fair share of houses and apartments that have not yet been converted to offices.

Neighbouring Ngong Road — mostly made up of residential property, shopping malls and schools — makes Kilimani even more attractive for putting up offices.

Overall, Mentor found that offices in the area will find tenants in small firms and non-governmental organisations.

“Take up rates is expected to hold at 85 per cent driven by NGOs, DFIs, SMEs and consulting firms. Slight under supply is expected in 2015 but a jump in total supply is forecasted in 2016,” said Mentor Group’s report.

Other property reports made similar forecasts of areas surrounding the Central Business District (CBD) being office hotspots.

Property management firm Broll says there is demand for space that meets international standards in areas close to the CBD.

“Higher supply has boosted the office sector, which is seeing higher selling prices for property – ranging from $140 (Sh12,305)—$180 (Sh15,823) per metre square. Construction of premier and A-grade offices is increasing, encouraging more and more private firms to relocate out of the CBD into nodes such as Westlands, Kilimani, Upperhill, Gigiri and Ngong Road,” said property management firm Broll’s 2013-2014 report.

Broll said it expects that the demand for Grade A buildings in Kilimani and other areas bordering the CBD will remain high for the time being.