KCB seeks partnership in Sh6bn homes, offices planWednesday May 12 2021
KCB Group #ticker:KCB is seeking partners to build 5,786 residential homes and commercial buildings worth Sh6.035 billion on its prime land along Thika Road as it seeks to a piece of the growing property market on the outskirts of the city.
The lender said it would enter into a joint venture (JV) with a real estate developer and create a special purpose vehicle (SPV) to finance and develop its 153.17 acres land prime land in Juja near the Thika Superhighway.
KCB said its contribution to the project would be land estimated to be worth Sh2.3 billion based on the cost of acre in Juja at Sh14.9 million while the JV Partner will provide the cash and meet other construction related costs.
This indicates that the successful JV partner will have a majority 61 percent stake in the project while KCB will hold a minority 38 percent shareholding.
“The bank intends to dispose the properties by either outright sale or undertake redevelopment of the land parcels into a mixed-use project comprising of about or over 5,786 units of various assets types such as residential, commercial and retail, student accommodation, industrial and light logistics for outright sale to the public,” said KCB in internal documents seen by the Business Daily.
Land and home purchase deals has remained sluggish in the wake of Covid-19 economic fallout, but analysts expect real estate to rebound.
“To achieve this, the Bank wishes to source for a strategic partner or investor that is interested in the mentioned project through a joint venture with the Bank.”
KCB is seen to tap the strong appetite for property along Thika Road which has the advantage of proximity to Nairobi.
“The Bank’s contribution will be land while the JV Partner shall provide all development/sale capital,” added KCB.
Thika Road has in recent years seen gated housing estates, shopping centres, and industrial infrastructure emerge in response to urbanisation pressure around Nairobi and its impact on demand for housing, especially in the middle class which has been enjoying rising income.