Property slowdown drives HFC out of construction business

HF Group has taken the decision to quit home construction business, barely seven years after the revival of its property development subsidiary – Kenya Building Society (KBS), in a move aimed at reducing exposure to the current real estate slowdown.

The KBS, which now trades as HF Development and Investment Limited (HFDI), was revived in May 2012 to cash in on the then lucrative property development business.

The company said the revival of the subsidiary would be critical in diversifying its revenue streams and cutting reliance on interest income from the mortgage business.

HFDI has over the years completed several residential and commercial projects across the country, including the popular Komarock Heights, Kahawa Downs, Richland Pointe (Kamiti Road), Precious Gardens (Riruta), and K-Mall (Komarock) among others.

But in recent years, HF Group has suffered the brunt of a declining real estate market to the point of recording a net loss of Sh598 million in the year ended December 2018.

In May last year, the company priced some of its city houses at a 30 per cent discount in a campaign dubbed Shika Nyumba na HF, in an attempt to expedite the sale of its property.

READ: Nairobi developers slash house prices as enquiries dry up

According to chief executive Robert Kibaara, HFDI will quit construction business later this year after completing projects that are currently underway in various parts of the country.

“We will complete the houses we are building this year and we will not start any new construction,” Kibaara said, adding that the company’s future projects will be undertaken through partnerships with other developers.

KBS was a key player in the Kenyan property development market in the 1980s and 1990s before it became dormant for more than a decade until its revival on May 9, 2012.

On that date, then managing director Frank Ireri said the firm’s entry into the property development market would widen its products offering – positioning the firm to make a profit from every stage of the home supply chain while advancing acquisition of mortgages.

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