Economy

Merali firm, Centum in tender battle for KDF real estate deal

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Sameer Africa chairman Naushad Merali. FILE PHOTO | NMG

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Summary

  • Tycoon Naushad Merali and Centum Investments are among individuals and local firms battling four Chinese firms to build and operate 11,000 houses for the Kenya Defence Forces (KDF).
  • The project will be funded through Public Private Partnership (PPP) model with the KDF providing Sh1 billion for the first phase as the military targets to ease an accommodation shortfall.

Tycoon Naushad Merali and Centum Investments are among individuals and local firms battling four Chinese firms to build and operate 11,000 houses for the Kenya Defence Forces (KDF), with the promise of earning rent for 15 years.

The Ministry of Defence listed H.Young East Africa, a firm associated with Mr Merali and a consortium of three local companies - Zutari Kenya, Blink Studio and NorthWind Consulting- led by Centum Real Estate to battle for the projects to be spread across several KDF barracks.

The four join China Gezhouba Group Company Limited, China Railways Construction Engineering Group, China Civil Engineering Construction Corporation and China Railway Engineering Group Company Limited in the battle for the multibillion-shilling deal.

The project will be funded through Public Private Partnership (PPP) model with the KDF providing Sh1 billion for the first phase as the military targets to ease an accommodation shortfall especially for the non-commissioned officer cadre.

The private investors will rent out the houses to KDF for 15 years, allowing them to recoup their capital running into billions of shillings over the period after which the lease will terminate and revert ownership to the military.

“The following eight firms/consortia have been shortlisted to participate in the Request for Proposal (RFP) stage of the tender for the Project,” Principal Secretary for Defence Brahim Mohamed said on Friday.

This is the first time Kenyan military -which has for years undertaken and financed its own projects - has turned to private investors under the PPP model.

The military attributed the move to use the PPP model to funding constraints from the National Treasury.

The military has targeted 2,340 residential units in phase one of the project with the Nanyuki base taking the biggest chunk at 737 houses on 300 acres of land, followed by 610 units at the Kenyatta Barrack in Gilgil.

Roysambu military base along the Nairobi-Thika highway will have 500 units on 15 acres of land and 125 houses will be constructed at the Lanet military base.

Entry of the Chinese firms marks the latest push by the Asian economic giant to dominate the local construction industry.

Chinese firms have built some of the country’s major infrastructure including the Standard Gauge Railway, the Thika Superhighway and now first double-decker highway in the country— the Nairobi Expressway.

Mr Merali is believed to own a stake in H.Young East Africa in addition to other businesses that include majority ownership in Sameer Africa that has interests in financial services, property and agriculture sectors.

The tycoon reduced his interests in the banking sector when he sold Spire Bank to Mwalimu National Sacco in 2016.

Centum Real Estate Company is a subsidiary of Nairobi Stock Exchange listed Centum Investments.

The firm is the holding company for Vipingo Development Limited at the Kenyan Coast, Pearl Marina Estates Limited in Uganda, Uhuru Heights Limited in Nairobi and Centum Development Kenya Limited.