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Gretsa University owners venture into Kenya real estate

Housing Finance boss Frank Ireri (left) with Kahawa Downs director Kibathi Mbugua and EADB director-general Vivienne Yeda during the signing of Sh620 million loan at Housing Finance head office in Nairobi

Housing Finance boss Frank Ireri (left) with Kahawa Downs director Kibathi Mbugua and EADB director-general Vivienne Yeda during the signing of Sh620 million loan at Housing Finance head office in Nairobi

The owners of Gretsa University have diversified into residential real estate business with signing of a Sh1.2 billion joint venture deal with mortgage lender Housing Finance.

The Kibathi Mbugua family, which also owns Sagret Hotels, has signed off its 5.2 acre piece of land opposite Kahawa Barracks for the construction of 220 house units, named Kahawa Downs, which will be built by Housing Finance through its subsidiary Kenya Building Society.

The Mbugua family built its wealth through coffee farming but has now diversified into education sector with Gretsa University and hotel industry with Sagret Hotels.

“Our father thought of doing something different and started looking for partners,” said Kibathi Mbugua a director of Kahawa Downs. Their father, Samuel Kibathi Mbugua, died in 2011.

They are five siblings but only Mr Mbugua, their mother Margaret and brother George Kamau are directors in the housing project.

Sagret Hotels has outlets in Milimani and on River Road in Nairobi. Gretsa University, located in Thika admitted its first students in 2006.

East African Development Bank also signed off a Sh620 million loan for the Kahawa Downs project on Thursday.

“We already are putting in equity of Sh104 million that is why we sought debt so as not to be overly exposed in the project,” said Housing Finance CEO Frank Ireri.

The mortgage lender said more than 90 per cent of the units which were priced at between Sh5 million and Sh6 million have already been bought. The market value of the project is Sh1.5 billion, with HF expecting to finish it by end of the year.

This is the second joint venture by Housing Finance with owners of huge tracts of land, the first being construction of 328 units on a 5.6 acre piece of land in Riruta. Landowners contribute the land as capital into the project.

Last year, the Kenya Building Society, a subsidiary that HF revived in 2012 after 13 years dormancy, sold housing units worth Sh1 billion at Kahawa Phase Five. It contributed Sh220 million to the group’s profit before tax. Kahawa Phase Five had 220 units.

The lender has dodged wrangles that have bogged down similar projects that have stalled due to disputes.

The Mwagirus, who are believed to own the land on which Tatu City is to be built, however, have been to the courts claiming that they have been sidelined in management of the project estimated to be worth more than Sh324 billion on completion.

The joint ventures have allowed developers to avoid the complicated and long process of land acquisition.

Housing Finance said it is also looking to partner with county government and the National Housing Corporation in the real estate business.

The Sh30 billion Fourways Junction in Kiambu is yet to be completed four years since inception following wrangles between land owners, the Gatabakis, and the developer Suraya Group.

The landowners felt short-changed by the developers of the 500 units project strategically located close to the upmarket Runda Estate.

The same scenario has bedevilled the Tatu City project. The multi-billion- shilling development was to host 25,000 houses and 62,000 people on a 2,400-acre land in Kiambu.

The Mwagirus, who are believed to own the land on which Tatu City is to be built, however, have been to the courts claiming that they have been sidelined in management of the project estimated to be worth more than Sh324 billion on completion.

The joint ventures have allowed developers to avoid the complicated and long process of land acquisition.

Housing Finance said it is also looking to partner with county government and the National Housing Corporation in the real estate business.

Business daily

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