Alexander Forbes retirement fund has set aside Sh10 billion to put up the mixed-use estate in Kitengela.
Alexander Forbes retirement fund has bought a 30-acre piece of land in Kitengela to set up medium-cost houses.
The retirement fund’s manager has set aside Sh10 billion to put up the mixed-use estate. Members will access up to a 60 per cent mortgage financing guarantee to purchase houses, based on their contribution with the fund.
“The scheme will have a commercial centre, with the houses built in the background. Non-members will be allowed to buy some of the houses, but for members we will give a discount—for example if a house is going for Sh6 million, a member will get it at Sh5.5 million,” said group CEO James Olubayi.
Members wishing to buy the houses using mortgage loans will be allowed to make additional contributions to the retirement scheme to cover the purchase, said the Alexander Forbes retirement fund chairlady Lucy Kambuni.
The Retirements Benefits Authority announced last month that total industry assets grew by 10.3 per cent in the second half of 2012 to stand at Sh548.8 billion on December 31, 2012.
Government securities constituted the largest share of industry assets with 35 per cent of total assets, followed by quoted equities at 24 per cent, according to the RBA disclosures.
Asset values were projected to continue to grow in the first half of 2013 due to the strong performance of the Nairobi Securities Exchange and the lower and stable inflation and interest rates. The plans by Alexander Forbes to venture into the real estate comes at a time when fund managers and retirement schemes which had invested heavily in equities and government securities are looking at reduced rates of return.
These expectations could see more retirement funds seek to diversify their portfolios in order to meet demands for higher returns from retirees.
The bourse has slowed down since the beginning of June, potentially threatening the earnings of the fund managers for the second half of the year.
The National Social Security Fund has also been seeking equity investors to build office blocks and a shopping mall on its 3.2 acre piece of land in Nairobi along Kenyatta Avenue. The fund is seeking to minimise the effect of swings in share prices that performance of the Nairobi Securities Exchange has on the returns it offers workers.
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