Mwalimu Sacco plans Sh2.9bn housing estate

Mwalimu National Sacco plans to build 871 housing units for its members at an estimated Sh2.9 billion in the newest multi-billion capital outlay by Kenya’s largest sacco.

The houses constitute 200 one-bedroom units, 350 two-bedroom, 250 three-bedroom and 71 three-bedroom maisonettes. The units will be built on a 20 acre plot owned by the sacco in Kisaju, along the Kitengela-Isinya road in Kajiado.

“We have handed the site to the contractor and it will take 130 weeks (two-and-a-half years) to complete. We will do it in phases,” said the sacco CEO Robert Shibutse.

The project is being financed by Housing Finance. Mr Shibutse said the sacco will tap an initial Sh1 billion from the financier as it collects deposits from members to substitute the debt.

The houses will be sold at between Sh3 million and Sh8.5 million under long-term mortgage terms.

Besides the residential houses Mwalimu Sacco is also in the process of constructing a 17-storey building worth Sh1.5 billion in Upperhill, Nairobi.

The building is fully funded by the sacco with the management saying it has already financed more than 60 per cent of the project. The project is expected to be complete in the last quarter of next year.

The largest sacco in the country with a membership of over 60,000, largely drawn from the teaching profession, is also buying a majority stake in Equatorial Commercial Bank.

The deal, which is awaiting regulatory approvals, is expected to be worth over Sh1 billion. Mwalimu’s Sacco interest in the small bank has stirred a storm given the public perception of banks being “big brothers” to saccos.

“The beauty is that this project (Kisaju) is not being financed internally. We have a core capital of over Sh5 billion but we don’t want to strain our ratios,” said Mr Shibutse.

READ: Sasra to approve Mwalimu Sacco bid to acquire ECB

The sacco’s management said it next plans to develop its land in Juja through a similar project before looking for land in other parts of the country. It is banking on its large membership and friendly pricing to sell the project.

Several other institutions are setting up residential estates in Kitengela area, including listed insurer CIC Insurance and micro-financier Jamii Bora Bank.

Mwalimu joins other co-operatives such as Stima, Safaricom and Chai saccos that are developing houses for their members.

The co-operatives are taking advantage of the low uptake of mortgage financing in the country due to high-interest rates charged by banks.

Saccos have been known to offer better lending rates than banks as they have to get members’ approval in the pricing unlike banks which are after profits.

As at December 2013, there were only 19,879 mortgage loans in the banking sector of an average size of Sh6.9 million each.

Lenders were charging an average of 16.3 per cent, as at December, for long-term house loans, attributing the high price to lack of long-term funds as most of their customers hold money for short periods.

Stima Sacco is set to build 1,500 housing units at an estimated cost of Sh4 billion on its 100-acre piece of land in Kasarani, near Kiriri University.

The Safaricom Sacco has announced plans to raise Sh1 billion to build 300 units on a five-acre piece of land in Mlolongo.

The real-estate sector has proved to be a good hunting ground for investors, including saccos, given the huge housing deficit in the country.