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Pension to purchase Sh600m rental unit

Apartment blocks at Garden City
Apartment blocks at Garden City, Nairobi. FILE PHOTO | NMG 

A pensions manager plans to use Sh600 million to purchase a developed commercial property eyeing rental income.

GenAfrica Asset Managers acting on behalf of an unnamed pensions scheme said property owners were at liberty to offer properties for sale with the purchase price limited to Sh600 million.

“Our client (name withheld) is interested in buying a rental real estate asset limited to a purchase price of Sh600 million. The stated price is subject to reasonable negotiation with our client’s Board of Trustees (BOT).

“It will be on a ‘willing buyer and willing seller basis but note that only an income-generating property shall be considered,” it says.

The new strategy takes away the headache of purchasing land, hiring an architect and eventually a contractor to put up a property that might take up to two years.

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For property developers in Nairobi, construction activities have slowed down due to approval delays at Nairobi County Government that makes investors who seek loans to develop properties end up burning the loan’s grace period even before construction starts.

Last week, Architectural Association of Kenya (AAK) President Mugure Njendu called for speedy resolution of the delays saying the city government was losing Sh91 million monthly, usually earned from building approvals.

“In 2018, the city government earned Sh1.12 billion from the approvals but the delays could see the revenue fall drastically due to the delays. As at June, 2019 their earnings hit Sh307 million with approvals worth Sh59 billion,” she observed.

Last year, financial sector regulators identified pension schemes as the second biggest financiers after banks, injecting Sh48.30 billion fresh funds in the real estate sector to close 2017 with a portfolio of Sh226.72 billion.

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