Centum Real Estate (Centum Re) will develop a green housing project where units will start from lows of Sh1.9 million as the firm seeks to deepen its footprint in the homeownership market.
The units which will include studio apartments going for Sh1.9 million and three-bedroom units that will cost Sh10 million, will be built within the Mzizi project at the Two Rivers complex.
The entrance of more investors in the affordable housing space has brought the price of units down steadily, placing them closer to the reach of the majority of the middle class who have traditionally been priced out of the home market.
Other developers with low-priced units include Edermann Property Limited which is currently selling three-bedroom apartments at Sh2.95 million each.
The average mortgage size in Kenya meanwhile stands at about Sh9 million with a wide range stretching to more than Sh30 million. For a house priced at Sh9 million, the monthly repayment will be in excess of Sh100,000 per month even assuming a favourable interest rate of 13 percent and a repayment period of 15 years.
Centum’s project, to be funded through a Sh3 billion ($20 million) loan from the International Finance Corporation, will see the construction of a total of 2,000 units, helping Centum Re further increase its share in the country’s homeownership market.
“The facility allows Centum Re to take a long-term view and develop housing communities of scale in the region,” Centum Re’s Managing Director, Kenneth Mbae said.
“The 2,000 homes are expected to be constructed in phases. The first phase of 300 homes is already significantly advanced.”
The studios combine bedroom, kitchen and living area in one space, making them ideal for young Kenyans who have just entered employment.
Centum Re says that the IFC loan is repayable within seven years and comes weeks after the firm finished repaying a Sh3 billion bond that it issued to finance housing projects.
The first phase of the development is set to be completed by July next year.
Disclosures by its parent company show that Centum Re posted a profit of Sh518.8 million in the half-year ended September, reversing a loss of Sh267.9 million the year before.
The firm’s developments are mixed-use comprising residential units and commercial buildings including offices.
Official data shows that a paltry 21.3 percent of the population in Kenyan urban areas live in their own homes with the rest renting, pointing to the huge opportunity for Centum Re and its competitors.