Foreign investors bet big on Kenya’s real estate market

Wealthy foreign investors are piling into Kenya as they seek to cash in on the country’s booming real estate market, a move that signals better days ahead for the sector.

Grand Towers Property Fund, Xterra Capital, Taaleritehdas, Delta Property Fund and Pivotal Fund are planning investments in the country worth billions of shillings as part of a rush into a nation that is currently enjoying a decade-long construction boom.

Grand Towers Property Fund, a South Africa investment trust, is planning to invest Sh3.5 billion in construction of mixed-use developments in Nairobi.

The property fund, which focuses on retail and mixed-use developments in major African cities, last year said it would put up prime developments such as malls and warehouses with the intention of renting them out to multinational clients.

Chief executive officer Peter Collins said that the fund was “looking for tenant-driven developments in the retail, commercial and industrial sectors with investment between Sh1 billion and Sh3.5 billion.”

The fund is bullish about setting up high-end residential estates to house expatriates who are coming to Nairobi as global firms set up their continental hubs in the Kenyan capital city.

Mauritian-based equity fund Xterra Capital Advisors recently announced that it will invest the lion’s share of its upcoming fund in Kenya’s property market.

The fund, which is raising Sh61 billion, said over Sh20 billion will be invested into the local real estate sector.

“[Xterra] plans to invest 28 per cent of its capital in Nigeria, 19 per cent in Ghana, 34 per cent in Kenya, seven per cent in Rwanda, four per cent in Uganda and eight per cent in South Africa,” the fund said in a statement.

According to Xterra, 50 per cent of the amount raised will be invested in retail properties, 19 per cent will go towards development of office spaces, 28 per cent in hotels while the remaining three per cent will be invested in industrial properties.

The fund said it would partner with local real estate firms AMS Properties and Hass Consult to develop properties worth Sh10 billion using equity financing.

On its part, Finnish investment firm Taaleritehdas – which has already opened shop in Nairobi – is planning to invest up to Sh3 billion in the local property market with its Sh6.4 billion Africa-focused.

The firm, which typically invests through a mix of debt and equity, said it was mainly focusing on opportunities in the mid-market where there is heavy demand.

South Africa’s Delta Africa Property Holdings entered the local property market scene last November after reaching an agreement to buy a 45.5 per cent stake in Buffalo Mall for Sh418 million.

Delta Africa acquired the stake from Mauritius-based Abland Diversified Holdings Limited, a company that is fully-owned by South Africa’s Pivotal Fund.

Growthpoint Properties, the largest listed Real Estate Investment Trust in South Africa, last month announced its intention to enter the local market.

The fund has unveiled a Pan-African fund targeting to raise Sh51 billion to invest in East, West and Southern African markets excluding South Africa.

The trust says it will invest 80 per cent of the proceeds in income properties and the remaining 20 per cent will go towards development properties.

The roll out of mega projects in roads, rail and ports is enticing foreign companies to expand into Kenya as they seek to position themselves to ride on the current real estate boom.

The country had the lion’s share of the Sh5.8 trillion projects that were recorded in East Africa last year on the back of mega retail projects and the Mombasa-Nairobi standard gauge railway.

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