Developer unveils new home ownership scheme

By JAMES ANYANZWA

Kenya’s vibrant middle income-class targeted in a new wave of partial property ownership in Malindi, Watamu, Diani, Mombasa and Naivasha.

Many people cherish owning homes. Majority dream of having a luxury house at the coast.

While this has been the goal of many middle-class Kenyans, the rising costs of home ownership have basically made investments in leisure and recreational facilities quite an arduous

accomplishment.

Kenya’s property prices have been on the upward trend by between 15 and 20 per cent in the last five years making homeownership an elusive dream to many.

Nevertheless, a new concept of home ownership has dawned in Kenya, which could be a huge reprieve to those staggering in the misery of financial paucity.

The latest idea is geared towards granting majority of aspirational Kenyans the chance to own a second home, built and furnished to international five star standards, at just a fraction of the massive costs associated with luxury property ownership, thanks to a privately registered Kenyan company, Baobab Development Group.

Residential development

The company, owned by a group of five businessmen, is currently completing the construction of a 32-unit lifestyle residential development; offering fully furnished, managed and serviced modern houses in Malindi. Additional developments planned in Watamu, Diani, Mombasa and Naivasha over the next five years.

The investors who pride in possessing a wealth of experience in building residential properties, resorts and hotels intend to construct more than 500 properties in the next five years.

Although the focus for now and the next two years is on Kenya, Baobab’s strategic intention is to expand its operations to the rest of the East African Community member states.

In order to ensure that its plans for low cost luxury homes come to fruition, Baobab has hooked up with a team of international corporate partners, including international property agents Knight Frank, Triad Architects, lawyers Kaplan and Stratton and Imperial bank, which has offered to provide mortgage loans to potential home buyers at competitive rates.

"We are looking for clients who want to get homes for luxury in different locations and those and those who want to make money from capital growth and rental income," said Patrick Wambui Chalk, the company’s marketing manager.

Baobab’s latest model of luxury homeownership allows prospective buyers to own share of a house worth millions of shillings at just a fraction of its actual cost, meaning that the cost of the property and services are shared among collective buyers.

According to this model each of the 32 units shall be sold in 4, 8 or 12-week fractions and all purchasers shall be given a 99 year lease certificate for their fraction of the unit, which equals real estate ownership.

In essence, once a person, couple or family purchases a 4, 8 or 12 week fraction, they hold full legal title and a 99 year lease and have complete ownership rights to that particular property for 4, 8 or 12 weeks respectively, per year for the period of the lease (99 years).

The fractional home ownership model which has been in operation in the US and Europe for 23 years provides for partial ownership of a property whereby any given property is owned by at least four and more often several individuals.

The system provides that for each house, an individual company shall be established and shares in that company, equivalent to the fraction/s purchased shall be allocated to the individual buyers.

An owner is entitled to returns commensurate with the amount invested but may of course sell his share at will at any stage with a guaranteed first option on forthcoming developments.

The homebuyer has the choice to either use the luxury home for his and or his friends and families’ holidays and benefit from capital appreciation or leave it in the custody of a rental management company in which case he enjoys regular healthy rental incomes per night in high seasons For instance, for just Sh3.5 million you can hold a 99-year lease on a two bed-roomed, fully furnished and fitted property, which you could use for one month every year for the period of your lease.

In other words, four people could each contribute Sh7.5 million and own a Sh30 million property for 99 years which you can either use yourselves on a rotational basis or just let out through the management company.

"Fractional property ownership is the ability to own a luxury home in a sought after location, at the cost of an average Kileleshwa studio. And when you can’t be there, you make money from rental returns." says Knight Frank Managing Director Ben WoodHams.

Baobab has invested over $3 million (Sh270 million) in the mega project and expects units in Malindi be completed in the next three months.

"Every Kenyan wants to own a property especially the emerging middle class," said Chalk, adding that Imperial bank will offer mortgage facilities of up to 10 years to facilitate acquisition of the properties.

Imperial bank is expected to process mortgages within 21 days for up to a maximum of Sh7.5 million at the existing residential development.

Chalk said in the initial stages, prices of the homes would range between Sh2.5 million to Sh7.5 million depending on the size of the house but would eventually increase in value by between 15 and 20 per cent during the final phases of construction.