Local investors seeking opportunities in the real estate sector have the chance to take part in the construction of Kenya’s single biggest project by buying parcels of land to build residential houses, office blocks, schools and hospitals.
The shareholders in the multibillion shilling project, dubbed Tatu City, invited applications from interested investors yesterday during official launch of the project, whose actual construction is set to begin in 2012.
Nahashon Nyaga, chairman of the project, said investors will from next month be allowed to apply to be part of the project after approval of the development plan by the different regulatory bodies.
“We are inviting individual investors, developers and corporate bodies to submit their applications for the property they are interested in according to the master-plan,” said Mr Nyaga.
The residential complex will be developed in 10 phases. It is expected to be home to about 62,000 people in a work-live-play environment.
Main promoters of the scheme, who will construct basic infrastructure on the 1,000 acre property behind Kenyatta University, are Renaissance Capital from Russia, Nahashon Nyaga- a former governor of the Central Bank of Kenya and managing director of Bidco, Vimal Shah.
The Kenyan shareholders own a 50 per cent stake in the company which has so far allocated Sh200 billion for infrastructure development.
Stephen Jennings, the CEO of Renaissance group which owns 50 per cent of the project says that investors will be allowed a maximum of five years to complete their developments, implying that completion of the first phase will be in 2016.
“We will allow investors a maximum of five years to complete the projects they take on,” said Mr Jennings, adding that the city offered an opportunity for investors to earn high returns on their investments.
The value of the minimum investment is yet to be arrived at, but investors will have to purchase whole blocks of land and show ability to finance the development as designed in the master plan.
Tatu City will feature privately-run establishments including residential and commercial property and other facilities including hospitals, schools and recreational developments.
“It is open to anyone who has the funds and is interested in investing in any sector as outlined in the master-plan,” said Mr Shah.
Lenders are already lining up with the aim of financing the construction of the different developments and the eventual acquisition of homes, with the first phase constituting 1,400 two-and three-bedroom apartments.
The project is betting on the short supply of commercial and residential developments in Nairobi where property has been identified as the best asset class owing to high returns it has consistently generated over the past decade, outperforming the stock market over the period.
A recent housing survey indicates that property as an investment class has more than tripled in value over the last 10 years while a comparable investment in the stock market appreciated by 2.4 times.
The high returns have seen an influx of foreign funds into the real estate sector in the recent past.
Arnold Meyer, the managing director of the real estate investments in Renaissance Capital says that the Kenyan property market offers the growth prospects that the Moscow-based investment bank is looking for.
“Kenya offers the ideal investment climate which we are keen on exploring while opening up investment opportunities that would take the pressure off Nairobi,” said Mr Meyer.