Markets & Finance

Liaison Group plans to build 10,000 affordable houses on 124-acre land

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Liaison Group Managing Director Tom Mulwa at a past event. FILE PHOTO | KEVIN ODIT | NMG

Insurance brokerage firm Liaison Group plans to build 10,000 affordable housing units along Nairobi’s Northern Bypass which will see the firm also set up a Real Estate Investment Trust (Reit).

The project will be developed through the firm’s subsidiary Patch Africa Housing on 124 acres of land, consisting of one, two, three and four-bedroom units.

Also read: Opportunities that are on offer under affordable housing

The construction of the houses will be financed through a joint venture by the developer –Patch Africa Housing— and a tenant purchase scheme.

Some of the units to be built include townhouses with domestic servant quarters and three and four-bedroom maisonettes.

The project will contain social amenities including a mall, mosque and church and school.

“We will securitise the tenant purchase scheme into a Reit. We can put the rent into an umbrella vehicle and sell them to investors. The housing units will be paying rent let’s say, for example, for 15 years, which can be sold to investors who buy the receivables at the net present value, to enable us to exit the project,” said Liaison Group managing director Tom Mulwa.

A Reit is a regulated collective investment vehicle that enables investors to contribute funds for buying units (shares) in a fund developing or holding real estate assets.

Patch Africa Housing is a special-purpose vehicle that the insurance broker set up to help it invest in the affordable housing market and set up a Reit for fundraising.

“We wanted to take part in affordable housing, and as a business, we created a company called Patch Africa, which is our aggregation tool,” said Mr Mulwa.

“Because we want to create Reits, we decided that we can create our own private pipeline where we develop our own housing estates, and sell them on a rent-to-own basis.”

The firm early this year started financing buyers of Stima Investment Co-operative Society’s low-cost houses in Ngara, Nairobi, under a tenant purchase scheme.

Under the deal, homeowners pay 25 percent of the total purchase price as a deposit and the balance is settled as rent-to-own payments.

Also read: Affordable housing: A real shot at home ownership or hot air?

The tenant purchase scheme attracts an interest of between seven and nine percent payable in 25 years.

Liaison has, however, moved to finance and develop its own projects ahead of the formation of a national Reit –Kenya National Reit— formed by financial institutions including pension administrators.

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