Housing Finance will invest Sh186 million in its first joint venture housing project after partnering with a land owner in Riruta to construct 328 flats comprising of one, two and three bedrooms houses.
Speaking during the ground breaking of Precious Gardens, Housing Finance Managing Director Frank Ireri said joint ventures will enable the firm to raise its involvement in the supply of middle to lower income housing.
"The high cost of land in urban areas and the complicated land acquisition process have continued to hinder delivery of affordable housing. Through joint ventures, Housing Finance will further raise its involvement in the supply of affordable housing units," he said.
He added that joint ventures will also aid in addressing speculative land prices in the sector.
"Housing Finance will establish partnerships, collaborations and joint ventures with persons with huge tracts of land where the company can develop substantial number of housing units to meet current demand," he explained.
In a joint venture, the land owner contributes the land as part of his/her contribution, and then the Housing Finance contributes cash equity towards construction.
Housing Finance plans to invest between 25 percent and 60 percent of equity in joint ventures.
Precious Gardens is the first joint venture project to be financed from proceeds in the recent bond issue.
Last year, the firm raised Sh3 billion for mortgage financing and onward lending to property developers and the firm set aside Sh1.5 billion from the Bond Issue for supply of properties targeting the middle to lower income segment.
Ireri noted that the rising demand for housing in Nairobi has exerted pressure on neighbouring towns including: Athi River, Kitengela, Ongata Rongai and Kiambu.
"Housing supply in these areas is hindered by unavailability of serviced land and the cost involved in servicing available land is also excessively high," he said.
Through its subsidiary, Kenya Building Society, Housing Finance is targeting to develop properties valued in the range of Sh2.5 million to Sh6 million through its own developments and joint ventures.
Ireri explained that the supply of affordable housing to low and middle income households in the country has not been rising fast enough to meet the current housing demand, revealing that the firm is targeting to develop over 550 residential units in the current financial year mainly through this concept.