Phatisa, a private equity management firm, plans to start construction of a Sh800 million apartment block in Westlands, Nairobi, in the next one month.
Phatisa is partnering with In-Time Capital, a developer, to construct 80 one-bedroom apartments that will each cost Sh9.95 million, valuing the development at close to Sh800 million.
The firm said it is targeting first-time buyers, a section of the market it says is currently undersupplied with quality housing at affordable prices.
“Phatisa recognises the growing need for affordable, good-quality homes in east and southern Africa. We are committed to providing the equity needed to ensure delivery of such homes, while securing an attractive return on investment,” said Phatisa East Africa deal team leader Okomboli Ong’ong’a.
The development, dubbed Westlands Place, is being done through the $41.95 million (Sh3.75 billion) Pan African Housing Fund that intends to invest in lower and middle income housing in the urban areas of Kenya, Zambia, Rwanda, Mozambique and Uganda.
Westlands Place is the second property development for Phatisa this year, in May it began construction of Westpoint Heights, a Sh500 million apartment complex in Kikuyu town.
Westpoint Heights is also the first project for Phatisa in the country and the firm said that more similar projects are already in the offing.
“Westlands Place will soon be followed by a third investment in the region,” said Mr Ong’ong’a.
Phatisa said that the apartments should be ready by December 2016.
Property researchers say that the high interest rates in the market have raised the ownership hurdle for potential home owners resulting in most of the sales coming from buyers who rent them out.
“With mortgage rates putting buying out of reach for all except those on the country’s very highest salaries, one of the trends now clearly emerging is dual ownership in order to service repayments, as well as institutional buying,” said Nancy Muthoni, host of The Property TV Show and co-sponsor of the new quarterly Home Ownership report.
The report found that 75 per cent of apartments were being bought for renting and for detached and semi-detached houses it was 50 per cent.
Other similar projects include the Lifestyle Apartments along Mombasa Road, a Sh1.6 billion development consisting of 230 apartments and the NextGen apartments.