By JOHN OYUKE

Kenya Commercial Bank Group has embarked on an ambitious realignment of its property unit in an effort to provide adequate housing in county governments while widening its mortgage customer base.

The bank’s immediate priority is to support financially viable projects, selecting investors with the highest integrity standards and products that better address transition gaps, such as logistics centres, techno parks and regional hotels.

According to Kenya Commercial Bank (KCB) Group Director Mortgages, Joram Kiarie, the realigned strategy includes financing of big commercial properties, pointing at the recently completed multi-million shilling Karen Triangle Shopping Mall in Nairobi

He said for KCB S&L Mortgages, the project is what true partnership is all about, adding:

"This is what we aim to do with all our customers — move together from one project to another — and successfully so."

He disclosed that the owners — Tweya Investments — are long standing customers of the Bank having developed Acacia Park, which were residential units for sale in Ongata Rongai before they developed Meridian Park in Kitengela.

"These were residential units for sale and Karen Triangle Mall was the third project that we have financed. They will shortly be moving forward to their fourth project which we have committed to support," he said.
Kiarie said the bank is also financing plot purchases, development as well as individual home buyers in and around the Nairobi County.
"We are already a key player for developments on Kambu Road and on the Athi River Machakos sides.

FINANCE CAPACITY

We are financing plot purchases, development as well as individual home buyers," he told the Financial Journal last week.

He said KCB is well positioned in all 47 counties and intends to play leading role in supporting property development in all counties."

The bank absorbed its mortgage-lending subsidiary in late 2009, in a move that was meant to strengthen the division’s capacity to finance huge housing projects in the country and extend similar projects to the region.

The merger bolstered S&L’s capital and liquidity position at a time when the mortgage financier was mulling over fund raising options as well as increasing its market share in the regional mortgage lending space.

Kiarie disclosed that to ensure that demand and supply for property are well balanced the bank has deployed and would continue to deploy necessary talent and resources to tap opportunities in the counties.

"The population continues to grow and hence higher demand for housing and commercial premises. With devolved county government, this demand will also be witnessed in all 47 counties," he added.

Kiarie said KCB had invested more than Sh40 billion in the mortgage sector, which it said is growing fast despite tough economic times characterised by high inflation and interest rates.

COOLING DOWN

He said the bank, which is also currently eyeing entry into South Sudan residential housing sector controls more than 30 per cent of the local mortgage business with investments ranging from commercial and residential properties, plots and hostels among others.

The new realignment in terms of thinking by the leading mortgage financier in the country comes at a time when property developers are pushing to have government and private sector work together under the public private partnership framework

According Edward Ndirangu, Chief Executive of Tweya Investment, a real estate and commercial property developer, incentives are required from the Government as the sector is already witnessing cooling down in house inquiries.
He says meaningful attention is lacking to encourage high growth, adding this is unlike other countries where governments are involved in terms of providing incentives to guide their housing markets for low-income segments of the population.

HOUSING REGULATIONS

He says current growth in the industry has been achieved amidst harsh environment.
On her part, Housing ministry Assistant minister Margaret Wanjiru says the Government is determined to work with the private sector to spur construction of houses.

She said the government is working at reducing the huge supply gap to enable most Kenyan own homes as prescribed in the New Constitution.

Annual demand of houses in the urban centres has increased by 6.6 per cent over the last seven years to reach 160,000 housing units, compared to 150,000 in 2003/2004, while in the rural areas demand has gone up by 16.6 per cent to 350,000 units from 300,000 units over the same period.
Speaking in Kisumu recently, Housing Finance Managing Director, Frank Ireri said there is need for a review of the planning and regulations especially within the local authorities so as to accelerate growth.

He said, bureaucracy currently facing property developers was hindrance to development of houses with many giving up.

"The approval procedures for subdivision of land are still lengthy and complicated, as there are too many statutes, which control and regulate subdivision and change of use," he said while launching a Sh65 million housing project in the town.