Ownership dispute pitting the firm and the Kenya Forest Service has stopped the construction of the 15,000 square metres of office space.
Private equity firm Actis is seeking help from the High Court to revive the construction of a Sh2 billion office block on Nairobi’s Ngong Road to cut losses running into millions of shillings.
Ownership dispute pitting the firm and the Kenya Forest Service has stopped the construction of the 15,000 square metres of office space that started in October last year and was to end in December this year.
Actis is asking the court to allow it to continue construction pending the conclusion of the dispute, arguing that it’s losing Sh24 million monthly.
“The plaintiffs are incurring continued heavy losses with an estimated weekly loss of Sh1 million for standby construction and Sh5 million losses in expected rental revenue due to delay in completion of the Nairobi Business Park Phase II project,” says Actis in court documents.
“This honourable court be pleased to set aside orders directing that…specifically all construction activities on the suit property be suspended pending the hearing and full determination of this suit.”
Actis, which has raised Sh24 billion from investors for ventures in Africa’s real estate, says it originally acquired the land from the Jockey Club of Kenya — which was offered the disputed land by the colonial government in 1927 in exchange for property that is the present day Kariokor area.
But the forest regulator — through its head David Mbugua — has said that the parcel was never degazetted and that Actis ignored its directive not to start construction on the land.
The PE fund was intending to host banking halls, conference centre and retail zone, an expansion of the Nairobi Business Park that Actis launched in 2004, deepening its investment in Kenya’s lucrative real estate market.
Actis joins a number of foreign investors including Russia’s Renaissance Capital that are investing billions of shillings in real estate to ride a housing boom fuelled by a growing middle class.
Its interest on the disputed land began in year 2000 after Jockey Club obtained approvals from the commissioner of lands to subdivide the land and change its user to allow half of it be covered by shops, offices and residential units.
This allowed the construction of the first phase of the Nairobi Business Park, where the Jockey Club was offered a minority stake in exchange for the land. In 2010, the joint venture further subdivided the land and sold the contested portion to Actis for Sh200 million.
The expansion of the park is the last project for Actis’ Africa Real Estate 1, which raised Sh13 billion and was used to construct commercial properties in its six years of existence including the Junction Mall and the phase one of the Nairobi Business Park.
The PE fund has raised the Sh24 billion under Actis Africa Real Estate 2 that will focus on retail and office development in east, west and southern Africa, excluding South Africa.
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