Absa, Acorn Holdings ink Sh6.7b student accommodation deal

Acorn CEO Edward Kirathe, Zacharia Mwangi Njeru CS Ministry of Lands and Absa Bank Managing Director Yusuf Omari during an affordable housing partnership on February 8, 2023. [Wilberforce Okwiri,Standard]

Absa Bank Kenya and property developer Acorn Holdings have embarked on a Sh6.7 billion financing partnership to support the construction of 12,000-bed capacity hostels for university and college students over three years.

The entire project is estimated to cost Sh11 billion.

The partnership more than doubles the current capacity offered by Acorn Holdings, with more than 500,000 students in need of housing, according to Acorn Chief Executive Edward Kiraithe.

The bed capacity for greenhouses will rise to 21,000.

Mr Kiraithe noted that with a million Kenyans turning 18 years old annually, robust investment in student hostels could be the determining factor of how many of these transition to, and sail through, tertiary institutions.

Acorn serves 140 colleges and has been banking on capital markets for the robust growth of purpose-built student accommodation.

It has drawn heavily from pension funds, with Kiraithe saying they're partnering with 25 pension schemes now, from 14 when Acorn was founded a decade ago.

The construction sector continues to recover after a marked slowdown two years ago, with experts' outlook showing a promising year.

"When the economy was slowed down by the Covid-19 pandemic, construction supported 30 per cent of the economy," Mr Kiraithe said. "In these upcoming projects, 70 per cent of raw materials will be procured locally."

Absa Bank Kenya interim Chief Executive Yusuf Omari said there is a deficit of 200,000 purpose-built student houses and sustained public-private partnerships could plug this deficit.

Housing Principal Secretary Charles Hinga remarked that the houses under construction are capital intensive, noting that partnerships with the private sector, with government incentivising developers so they can manage to construct houses in far-flung universities, will be the only way to plug the deficit.

Lands Cabinet Secretary Zacharia Njeru said the ministry is working on policy incentives to plug the housing deficit.

"We are creating a supportive environment for private sector participation and to ensure ease of access to financing," said CS Njeru.

The government plans to pump billions of shillings into the affordable housing agenda, with a plan to construct 250,000 units annually through public-private partnerships.

The ministry will also ensure the security of tenure for land-based investments, said the cabinet secretary.