Company News

Inside Housing Finance’s Big Plan to Lower Housing Costs

Developers tend to price their homes way above what most mortgage buyers can afford.

Updated on

October 2, 2012

Housing Finance Kenya — Housing Finance headquarters on Koinange Street, Nairobi. PHOTO | FILE

Housing Finance has set aside Sh1.4 billion to finance the development of houses on its own or through joint ventures with landowners.

The allocation of nearly half of the Sh3 billion the firm expects to raise through a corporate bond is a strategic shift aimed at earning the firm a higher profit from the home supply chain.

“Our focus is in getting involved throughout the home supply chain to ensure the market has the kind of homes our target customers can buy,” said Sam Waweru, the finance manager.

According to Mr Waweru, property developers tend to price their homes way above what most mortgage buyers can afford, thereby denying the lender many business opportunities.

Data from various sources show that in the past five years, most housing projects have been attracting wealthy buyers – who often buy homes in cash, at a discount.

Through the Kenya Building Society, its property development arm, Housing Finance is also hoping to profit from the margin accruing from the various steps in the house supply chain.

The lender is using the subsidiary to develop a mixed-use estate dubbed Komarock 5A, comprising 162 residential units, and a commercial centre in Komarock for Sh800 million.

The firm plans to sell the houses at 15 per cent below the market value to pull in low and middle-income earners currently faced with high credit costs.

Housing Finance has already signed joint venture projects in Kahawa and Rituta where the firm is a 50:50 partner with the respective landowners in both projects.

In Kahawa along Thika Road, the lender is putting up a 220-unit housing project to be known as Kahawa Gardens, while a 414-unit apartment project dubbed Precious Gardens is currently underway in the Riruta area.

HF managing director Frank Ireri told journalists in a past interview that the lender’s re-entry into the house construction business would be critical in diversifying its revenue streams and reducing reliance on interest income from the mortgage business.