Business Daily (Nairobi)
Mwaura Kimani
16 November 2009
Home seekers who applied to buy the National Social Security Fund (NSSF) houses at Nyayo Embakasi, Nairobi, will have to wait until mid next month to know their fate, but they will part with more money than budgeted.
NSSF managing trustee Alex Kazongo said the fund had adjusted the prices of the 674 housing units upwards by between Sh250,000 and Sh550,000 per house in tandem with the prevailing market rates.
Other conditions of sale have also been altered including the first-come-first-serve basis on which the houses were to be sold.
This means while interested buyers had budgeted for between Sh3.85 million and Sh6 million per unit when the sale kicked of in September last year, they will now have to raise between Sh4.4 million and Sh6.25 million.
And they will have to raise the full purchase price up-front before the end of this week, in addition to the 10 per cent deposit they had paid earlier.
The change in the conditions of sale piles fresh spotlight on the arrangement which analysts warned was open to corruption and arm-twisting.
Media reports had earlier indicated that prominent personalities were among those who had expressed interest, despite the housing project being meant for low income and mid-level workers.
But Mr Kazongo denied the claims, saying the sale was being done transparently and only the targeted category will be considered.
According to the Managing Trustee, the Fund had invested over Sh1.5 billion in the project.
The sale of the houses, analysts said is a test for the Fund, which is fighting to bring back better times, meant to shield billions of shillings in workers' contributions which has remained exposed amid power struggles that have rocked NSSF in recent years.
Sale of the houses
"We had hoped to complete the sale in one year but this has been untenable," said Mr Kazongo. "As a result, we have had to adjust some of the terms of sale due to the time lapse and the need to sell the units at current market values."
He said the Fund has already written to the shortlisted applicants informing them of the changes in the initial terms of sale and requiring them to indicate whether they still have interest in the purchase.
According to the initial agreement, the 674 houses were to be sold on a first-come-first-served basis, with the individuals only required to raise a 10 per cent deposit -- between Sh385, 000 and 600,000 -- while the remaining amount would be paid in monthly instalments.
Buyers were also required to offer proof of their ability to pay the remaining balance in installments, equal to what they would pay as monthly rent, to make them affordable to the targeted middle class.
The adjustment of the prices come in the wake of harsh economic times which has eroded disposable income for most Kenyans, while stirring activity in the already vibrant real estate market.
Purchasing power
Despite the weakening purchasing power among most investors and potential homeowners, the real estate market has defied the country's soft economy to post positive growth -- helped by remittances from the Diaspora and increased mortgage lending--even as key sectors such as agriculture and manufacturing are on the decline.
Property has also emerged as a hot commodity for investors looking for a safe haven following the bearish run at the stock market.
Analysts say the expected vibrancy of the construction sector will boost the economy in the fourth quarter egged on by its effect on other businesses such as cement, steel and paint makers.
The NSSF is a big player in the real estate sector with an investment of Sh25 billion in the sector as per November 2008.
According to Mr Kazongo, the sale attracted 4,700 applicants but only 2,000 have met the basic requirements.
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