NHC seeking to raise billions through IFC for affordable housing project in Kenya

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  • National Housing Cooperation (NHC) is seeking to raise KSh 7 billion through the International Finance Corporation (IFC) for an affordable housing project in Kenya 
  • NHC will use the investment to fund the construction of 3,500 housing units in Athi River, Machakos County
  • The housing units are part of the KSh 20 billion Stoni Athi Waterfront City project, comprising 10,500 units to be developed on a 150 acres piece of land.

Kenya’s National Housing Cooperation (NHC) is seeking to raise KSh 7 billion through the International Finance Corporation (IFC) under the Public Private Partnership (PPP) model to fund the construction of 3,500 housing units in Athi River, Machakos County.

The housing units are part of the KSh 20 billion Stoni Athi Waterfront City project, comprising 10,500 units to be developed on a 150 acres piece of land.

The affordable housing project comprises one, two and three-bedroom units targeting the low, middle, and high-income earners.

According to the company, IFC will finance the development of the units to completion, upon which the private investors will recoup all their capital through monthly rent collections within 15 to 20 years. After that, full ownership of the development units will be transferred back to the NHC.

Analysts from Cytonn Investments said they expect that with the Public Private Partnership model, the project will be fast-tracked through the long-term funding, as affordable housing projects have been stalled primarily due to inadequate funding.

According to the investment firm, the government delivered approximately 3,000 housing units, way lower than its target of 500,000 units by December 2022.

Consequently, Kenya’s housing deficit continues to grow at a rate of 200,000 units per annum and currently stands at 2.0 million units.

Some of the affordable housing projects in the pipeline include the Pangani affordable housing project, the River Estate project, and the Park Road project, among others.

Additionally, the involvement of the private sector is expected to boost investor confidence in the initiative, which has been gaining traction despite its challenges, evidenced by the 330,324 applicants registered in the Boma Yangu portal.

In a related story, EA Limited, a subsidiary of TransCentury PLC, an African infrastructure investment company based in Nairobi, Kenya, has announced plans to develop an affordable housing project worth USD 250 million (KSh 29.8 billion) in the Democratic Republic of Congo (DRC).

According to EA Limited, the project targets the Office Conglais De Controle (OCC) staff (a quality assurance body). It will consist of 5,000 units to be constructed over five years, starting in 2022.

Notably, EA limited will be the Engineering, Procurement and Construction (EPC) contractor as per the signed Memorandum of Understanding (MOU) with Symbion Architect, making the treaty the first to be initiated since DRC joined the East African Community bloc in March 2022.

An analysis by Cytonn Investments indicates that EA’s decision to invest in DRC was mainly driven by several factors, including the favourable demographics fuelling demand for housing units, with DRC’s current population and urbanisation growth rates being 3.1% and 4.4%, respectively, compared to the world’s 0.9% and 1.7%, as at 2021.

House under construction. Photo: Unsplash.

Additionally, the population is projected to reach 145 million by 2050, with 60.0% being urban dwellers and 40.0% being rural dwellers, from the 42% urban dwellers and 58% rural dwellers recorded in 2014.

The growing need also drives the decision for decent and affordable homes as the project targets 5,000 staff members and their families, which may translate to over 20,000 individuals assuming an average of four people per household.

Consequently, this is expected to help curb the existing housing deficit in the country, which is currently at 4.0 million housing units and growing by 250,000 p.a as of 2021.

“In our view, EA’s expansion move will see the TransCentury group further increase its asset base and footprint in the East African region,” Cytonn said.

EA is expected to benefit from DRC’s viable housing market, primarily driven by unique demographics, resulting in a rapid demand for dwelling units surpassing the current supply.

Moreover, the move by EA is expected to boost investor confidence in the region, which has witnessed improved activities and developments in various sectors, with the most recent focus mainly on the banking sector.

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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