21 November 2012

Kenya: UAP to Enter Juba's Residential Market

UAP Holdings has disclosed intention to enter Juba's lucrative residential property market to reap from high rental yields.

The insurance group will put up a 15-storey, two-bedroom apartment block in the South Sudan city christened UAP Juba Apartments, to plug into the high demand for rental space.

This is its second real estate project in the new state in quick succession to a commercial development, Equitoria Tower.

"Very soon our rental income will be substantial. For example, in places like Juba, anyone who has been there knows there is a high demand for housing," said group managing director James Muguiyi.

"We are getting lots of interest from expatriates working there and are willing to pay as much as $7,000 (Sh600,000) for a two-bedroom apartment. That in Kenya is equivalent to rent for a house in Muthaiga!"

Equitoria Tower, a 12-storey complex, is being built at a cost of Sh470 million and is expected to be complete by end of 2013. The development is a joint venture between UAP Insurance Sudan and Central Equatoria Investment.

Muguiyi said last week when UAP launched a public offer that the group intends to earn 50 per cent of its revenues from insurance and the rest from property and other businesses in five-year's time.

The ongoing public offer prospectus says the Sh750 million being raised by UAP Holdings will be used in addition to Sh4.55 billion received from private equity investments to fund expansion, property development, re-organisation and re-engineering the balance sheet.

UAP will use Sh1.4 billion to fund construction of UAP Tower in Nairobi, Sh284 million for construction of UAP Nakawa Business Park in Uganda and Sh470 million for the Juba office complex.

The firm has not disclosed how much will be spent on the residential development in Juba but has already identified a site and is armed with an architectural design.

Subsidiary property holding companies have been registered in Kenya, Uganda and South Sudan with a view to creating Special Purpose Vehicles for property investments including financing developments.

The firm said its existing property investments have provided a stable source of income and new developments will now be undertaken within the SPVs.

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