The shift to property market is mainly motivated by the sharp rise in the price of homes and rental income – driven by the country’s rapid urbanisation, which has seen investors enjoying high margins for their real estate ventures.
From insurers to logistic firms and bakers, companies are increasingly pouring big money into into property investments, underlining property as an asset class of premium returns compared to shares, bonds and fixed bank deposits.
Express Kenya, which is mainly targeting airport staff and employees of other companies based on Mombasa Road, is initially putting up 224 residential houses on 3.5 acres in four high rise blocks comprising one, two and three-bedroom houses.
“The base price of the one bedroom unit is Sh8 million, for the two bedroom Sh12.5 million, three bed-room Sh14 million and the three bedroom with a servant quarter Sh16 million,” Express Kenya manager for project accounting Jane Nungari said in a statement last month.
Phase one of the project is expected to be completed in two years. On final completion of the project, the company will have constructed 1,200 residential houses on the land which measures 15.75 acres.
The NSE-listed Express Kenya joins other listed companies such as the East African Portland Cement, Eveready (EA) Limited and Car & General which have recently diversified or in the process of expanding into real estate to supplement earnings from their main line of business.
The EAPCC recently said it was interested in partnering with government to put up low cost housing on 1,300 acres of land it has exhausted mining raw materials from in Athi River.
The company’s managing director Kephar Tande had said that most of the land in Athi River, Machakos County and parts of Kitengela in Kajiado County could be used to build homes and industries if the government approves the proposal.
EAPCC is owned by the State, the NSSF and French cement conglomerate Lafarge.
The cement manufacturer owns huge tracks of land, but some of it – especially along the upcoming Mombasa-Nairobi standard gauge railway – has been grabbed by gangs of highly connected speculators.
Eveready, which shut its Nakuru battery factory in 2014, citing unfair competition from cheap imports, is delving into real estate in a bid to cushion itself from losses while spreading out its product portfolio beyond batteries.
The firm is conducting feasibility studies to ascertain whether to put up a shopping mall, residential houses or a hotel on the 18.5 acre piece of land where the plant sits.
Car & General is pouring big money into real estate across East Africa in a bid to diversify revenue streams. The company, whose core business is sales and service of vehicles, motorcycles and other machinery, is investing at least Sh2 billion in Nairobi and Kampala property.
The growing presence of institutional money in Kenya’s real estate market is being attributed to the rising demand for housing, which has seen property investors reaping higher than average returns on their investors.