Stima Sacco to build Sh4bn housing estate for members
Stima Sacco CEO Paul Wambua. The sacco recently received a credit of B with a stable outlook. FILE
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Stima Sacco plans to build 1,500 homes at Kasarani with bookings set to start in August.
Stima Sacco is set to build 1,500 housing units for its members at an estimated cost of Sh4 billion, joining a growing list of co-operatives delving into real estate.
The houses will be built on the Sacco’s 100-acre piece of land in Kasarani, near Kiriri University. The co-operative is seeking a financier for the project in addition to members’ contributions.
“We expect that individual deposit placements for unit bookings will start in August 2014. The 1,500 units should be ready 36 months thereafter,” said the Sacco CEO Paul Wambua.
Stima Sacco recently received a credit rating of B with a stable outlook from South African based rating agency GCR, a pre-requisite when seeking debt funding.
The Sacco has a membership of 14,267, and is ranked fifth largest in the country with an estimated market share of 3.9 per cent. Members will get long-term mortgage financing from the co-operative at a fixed rate.
“The financier will be identified through a competitive bidding process once the board processes the shareholder and regulatory approvals planned for the next three to four months,” said Mr Wambua.
Stima joins other co-operatives such as Safaricom and Chai Saccos that are developing houses for their members.
The Safaricom Sacco has announced plans to raise Sh1 billion to build 300 units on a five-acre piece of land in Mlolongo. Uptake of mortgage financing has been slow in the country due to high interest rates and lack of access to long term funds by the lenders.
As at December 2012, there were 19,177 mortgage loans in the banking sector of an average size of Sh6.4 million each.
Lenders were charging an average of 17 per cent, as at December, for long-term house loans attributing the high rate to lack of long-term funds as most of their customers hold money with them for short periods.
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.
‘‘The market needs a radical shift to free up long-term funding for mortgages through establishment of a secondary mortgage market,” said managing director of The Mortgage Company Carol Kariuki last month.
The real estate sector has proved to be a good hunting ground for investors given the huge housing deficit in the country.
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