KCB to build 10,000 low cost homes

KCB chief executive Joshua Oigara speaks during a recent event.
KCB chief executive Joshua Oigara speaks during a recent event. PHOTO/FILE
Kenya’s biggest bank by assets KCB is set to enter the lucrative construction business as it seeks to diversify its product and service offering as well as broaden its sources of income.

The company is planning to separate its mortgage lending arm S&L from its banking business – registering it as an independent construction firm that will build low cost houses for the middle class.

KCB chief executive Joshua Oigara said S&L will by December become an independent entity that can raise its own funds to develop affordable homes.

“What we want S&L to do now is shape itself as an independent entity of the company that builds affordable houses. We want to build 10,000 houses in the next three years,” Mr Oigara said in an interview.

“We will give it a chance to get its own capital, look for partners. Right now we are working with people in Brazil and Mexico to bring in seed funding for investment.”

The bank, which is yet to disclose the scale and location of its projects, hopes to ride on new construction technology to build houses priced between Sh1 million and Sh3 million.

The lender expects to attract a significant number of mortgage takers who are currently priced out of the market. The average mortgage loan is Sh7.5 million – an amount that is out of reach for many Kenyans.

The firm appears to be following in the footsteps of Housing Finance, which has become a major player in the construction industry following the revival of its dormant construction subsidiary in May 2012.

The construction arm, known as the Kenya Building Society (KBS), was a key player in the property development market in the 1980s and 1990s before it became dormant for more than a decade until its revival three years ago.

KBS has recently contributed significantly to Housing Finance’s profitability – following the completion and sale of several projects in Nairobi, including Komarock Phase 5A in Nairobi’s Eastlands estate.

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