HF partners with land owners in real estate investments
Photo/File
Housing Finance has partnered with two land owners in Nairobi to develop apartments targeting middle income earners in multi-million shilling projects in the City’s Riruta and Kahawa West areas.
Housing Finance (HF) has signed joint venture agreements that will see the mortgage firm co-own real estate projects with land owners as the company looks to diversify its revenue streams by tapping into the homes development market.
The lender has so far partnered with two land owners in Nairobi to develop apartments targeting middle income earners in multi-million shilling projects in the City’s Riruta and Kahawa West areas.
In the arrangement, both HF and the landowners own the project jointly, with the shareholding dependent on the input of either party as a proportion of the value of the entire project.
Peter Kimeu, the head of project administration at HF, said that joint ventures would enable the mortgage lender to profit from the lucrative property market, while allowing the land owners to unlock the value of their investment.
“HF will gain from the delivery of homes while helping several individuals who own land, but lack the funds to develop homes to realise value,” said Mr Kimeu.
The shift in strategy by HF to joint ventures with landowners represents the latest plan by the mortgage lender to broaden its revenue streams and cut reliance on interest income from home loans.
Details of the housing project contained in Benedict Ndungu’s (landowner) application for environmental approval from Nema estimate that HF will invest Sh1.2 billion in the Riruta housing estate that will consist 414 houses dubbed Precious Gardens.
Mr Kimeu declined to reveal the shareholding arrangement signed with Mr Ndung’u, or the value of the land he contributed to the joint venture.
He said the shareholding is determined after both the value of the land and the cost of development are computed by professionals.
In both projects, HF will be looking to sell the homes while the respective landowners will be at liberty to either sell or rent out.
The lender would also foot the entire construction costs for the 200-unit housing project in Kahawa West in exchange of a yet-to-be determined stake.
HF owes its entry into the development of homes to the huge capital gains in the property market which sector analysts estimate to have risen over four-fold in the last decade alone.
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