Residential Projects

Britam Holdings Makes Bold Bets on Kenya’s Real Estate

The insurer is building 11 floors of furnished and serviced apartments in Kilimani, Nairobi.

Updated on

June 30, 2017

Britam Holdings chief executive Benson Wairegi. PHOTO | FILE

The local financial markets are increasingly churning and this is getting scary for everyone.

From the man in the streets to the sophisticated fund manager, the Nairobi Securities Exchange (NSE) is particularly one investment class that has posted depressing returns over the past couple of years.

Fretting over the volatility of the stock market, Britam Holdings is shifting focus to the property market in a bid to shore up its revenue.

The insurer has embarked on the construction of 11 floors of fully furnished and serviced apartments in Kilimani, Nairobi, as it seeks to cash in on the rising demand for non-hotel-based accommodation among business tourists visiting the city.

The project, which will be built at Sh3.3 billion, comprises 117 two-bedroom and 46 one-bedroom rental apartments located on 1.6 acres on Nyangumi Road in Kilimani.

The project is being undertaken by Britam Properties, a subsidiary of Britam, and it is earmarked for completion in 2020.

At Sh12,000 to Sh20,000 for a two-bedroom unit and Sh8,000 to Sh12,000 for a one-bedroom unit a night, the development looks quite promising considering that Nairobi is positioning itself as the regional business hub.

Diversification strategy

Britam managing director Benson Wairegi said the company’s decision to venture into property development is part of its diversification strategy meant to lower portfolio risk and exposure to the stock market.

Mr Wairegi noted that there was a huge demand for serviced apartments in Nairobi yet the supply of the facilities remains quite low.

“The market will need at least 1,000 serviced apartments in the next three years and Britam Properties will help in bridging this gap,” he told guests who attended the project’s groundbreaking ceremony last month.

Meanwhile, Chinese property firm Ahcof Investments (Kenya) Limited has announced plans to build a 10-floor high-end residential complex on Mbaazi Avenue in Lavington, Nairobi.

In its regulatory filings, Ahcof Investments says the proposed development will consist of three blocks of apartments – two blocks holding 40 two-bedroom apartments each, and a third one hosting 80 units of high-end apartments.

“The (development) will increase urban housing facilities, increase land use and improve local living standards,” Ahcof says in its environmental impact assessment study submitted to the National Environment Management Authority (Nema).

The Sh522 million development will sit on a one-acre plot and will make use of storeyed facilities to enable the built-up area to occupy 35.5 per cent of the land while an on-ground parking bay has been reserved for 130 cars.

An additional 56 parking lots will be provided on the mezzanine floor.

Ahcof is the developer behind the Astoria Apartments in Lavington.

Cash-rich companies are diversifying into property and real estate development in a bid to meet the rising demand for housing in the country, which stands at about 200,000 units a year against a supply of less than 50,000 units annually.

There are concerns, however, that developers are keen on building homes for high-income groups at the expense of the lower-income earners who form the bulk of the local citizenry.

The rapid construction of homes for the upper class has brought about a glut of apartments at a time when demand among the target market is declining.