The houses, which will be built on a 960-acre piece of land, will be the fundâ€™s largest real estate project and transform the profile of Machakos County that will also host the Sh800-billion Konza technology city.
President Mwai Kibaki said in a speech read on his behalf by finance minister Njeru Githae that NSSF housing plan has been selected as one the flagship projects under the vision 2030â€”which seeks to turn Kenya into a middle class country by 2030.
â€œIt is commendable that it (NSSF) will shortly embark on developingÂ 30,000 housing units, complete with infrastructureÂ that is set to transform Mavoko Municipality into a city within a city,â€ said the President at NSSFâ€™s first Annual General Meeting in 47 years.
The NSSF did not provide time lines or the worth of the project, but people familiar with the plan say the fund is seeking joint ventures due to the huge financial requirements of such projects and the need to remain within regulated investment thresholds set by the Retirement Benefit Authority.
The land in Mavoko is valued at Sh2 billion, but the Auditor- General has raised questions over its depreciation given that the fund had valued it at Sh2.98 billion.
Under the joint venture, NSSF will provide the land which is shaping up to be the biggest costs item in housing construction and part financing. In return, it will earn capitals gains from the sale of the houses or earn rental income. NSSF has been under pressure to meet regulatory requirement capping real estate investments by pension scheme to 30 per cent of their assets.
Its investments held in land and buildings, as a proportion of its entire portfolio, rose from 34 per cent to 39 per cent in December last year against a statutory requirement of 30 per cent. This, however, was the result of a Sh10.3 billion drop in NSSFâ€™s stock market portfolio following a bear run at the Nairobi Securities Exchange (NSE), as its investment in property remained flat at Sh38 billion.
The fund has assets estimated at Sh97.8 billion spread in government securities, equities, fixed deposits and propertyâ€”which stood at Sh38.1 billion in December. â€œOur investment in property development is regulated by the RBA, which stipulates a maximum of 30 per cent of assets in real estate. If NSSF were to embark on this venture solely, the fund would exceed the investment allowed by RBA,â€ said an executive of NSSF who sought anonymity.
RBA recommends that retirement funds should maintain at least 70 per cent of their portfolio in liquid assets to guarantee payment of pensionersâ€™ claims. NSSF plans to sell two commercial buildings in Nairobiâ€™s Central Business District to bring the fund into compliance with the RBA guidelines.
The fundâ€™s renewed interest in the property market comes as real estate emerges from a bearish run, surveys indicate. CFC says that property prices have risen 3.5 times over the past decade compared to share prices appreciation of 2.42 times over the same period.