Centum Real Estate is targeting homeowners and investors with Sh4 million one bedroom houses on Mombasa and Ngong roads, as the firm seeks to increase revenues following the decline in its half year profits.
The subsidiary of Centum Investment Company is seeking joint venture (JV) agreements with land owners in construction of housing units along Mombasa Road and Ngong Road after Junction Mall.
Under the agreement, the land owner will provide the land upfront as equity and form a special purpose vehicle for profit sharing.
Centum Real estate expects the plans to reduce it overall costs for development after reporting 71.7 percent drop in net profit to Sh650.4 million for the year ended March 31 due to reduced demand of residential units over the economic fallout induced by the pandemic.
“We started the market validation and we are scouting for joint venture. We will not buy the land but the owner will provide it as upfront and form a special purpose vehicle for profit sharing. The land owner will contribute the land as equity while Centum will finance the construction,” Mr Samuel Kariuki, the managing director of Centum Real Estate said.
“The value of the land will be a factor and each case will be structured differently.”
The projects will have one to three bedroom houses priced from Sh4 million to Sh7 million.
“The area before Junction Mall it usually high-end and we are looking at affordable units not different from what were are providing in other areas.”
The firm has already inked a similar agreement with Crossnet Limited for construction of an apartment complex, pavilion, with 950 units in Ruaraka along Thika Road.
The aggressive development follows at time of high market supply of both commercial and residential spaced unmatched to subdued uptake.