An architect briefs a client. PHOTO | FILE Centum Investment Company’s subsidiary Centum Real Estate is seeking joint venture deals with land owners for construction of affordable houses in Nairobi.
Under the JV agreement, landowners on Mombasa Road and Ngong Road near the Junction Mall will provide land as equity and form a special purpose vehicle for sharing profits.
Centum RE expects the plan will reduce its overall costs for development – enabling it to build one- to three-bedroom houses selling from Sh4 million to Sh7 million.
“We started the market validation and we are scouting for joint venture… The land owner will contribute the land as equity while Centum will finance the construction,” Centum RE managing director Samuel Kariuki said.
Centum RE has already signed a joint venture agreement with Crossnet Limited for construction of Pavilion – a 950-unit apartments complex on Thika Road, Nairobi. 2,061 homes
The company is currently building 2,061 homes across 11 projects in Kenya and Uganda, of which 67% with a total sales value of Sh12.1 billion have been pre-sold.
The high cost of land in Nairobi is pushing many investors out of the capital, while forcing devoted city developers to price their houses way above the reach of most buyers.
To meet the demand for affordable housing in the city, developers are increasingly opting for joint ventures with land owners to cut prices and also to mitigate risks of unsold inventory.
Housing Finance Company (HFC), for example, has over the past few years completed several multi-billion-shilling homes projects in Nairobi under joint venture deals with landlords.
These projects include Richland Point on Kamiti Road, Precious Heights in Riruta, and Kahawa Downs in Kahawa Wendani among several other projects.
However, HFC is now moving away from such deals as it transforms from a property builder and mortgage financier to a regular bank in response to ongoing real estate challenges.