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Startup turns saccos into vehicles for members to own homes in Kenya

Cretum Properties Managing Director Janet Wanjiru Mungai. Many people, especially those living in major towns are grappling with rising cost of rent, let alone contemplating mortgages.

Cretum Properties Managing Director Janet Wanjiru Mungai. Many people, especially those living in major towns are grappling with rising cost of rent, let alone contemplating mortgages.

Simon Taiko, a medical practitioner in Nairobi, had a dream of buying a prime plot of land in Nairobi.

His plan was to build his dream house.

Armed with his dreams and unyielding hope, Mr Taiko approached a real estate agent, who took him through all the steps one must meet in order to buy land.

The agent showed him maps of different areas where he could buy a plot and even provided further information on the available social amenities in target places — that fired his imagination even further.

However, after all the marketing, the agent informed him of the price, Mr Taiko was lost for words.

None of the financing options the agent explained to him sounded helpful.

“Buying land in Nairobi is expensive.

I am still looking for other options because my dream of buying a piece of land here and building a house is still alive,” he said.

Mr Taiko’s experience is not uncommon.

Every so often, one would encounter the same while looking for a piece of land to buy, or home hunting.

Land is proving very expensive, particularly for middle income earners. Sky-high interest rates for bank loans and mortgages worsen the situation.

Although investing in a plot in urban areas is not comparable to the ownership of tracts of land in the rural areas, many Kenyans living in urban areas, especially the middle class, now prefer to own a house because of the rising cost of rent.

According to Janet Mungai the managing director of Cretum Properties Ltd, a company that works with Savings and Credit Cooperative Societies in Kenya to buy large tracts of land and subdivide it into smaller plots for sale, many people, especially those living in major towns are grappling with rising cost of rent, let alone contemplating mortgages.

Last month, a research by The Mortgage Company and property tracker HassConsult noted that only a fifth of Kenyans living in urban areas can afford to take Sh1,000,000 home loan.

Valuable investment

“Most people have realised that with rent, you own nothing and you are investing in nothing.

You have the right to live there, but you are not building towards anything.

When you get a piece of land and build your own home, it is a valuable investment and it increases your self-worth,” she says.

Her Nairobi-based company which she founded in 2011 has enabled thousands of people, especially the youth own land.

Many of the buyers have ended up building homes. At the moment, her company works with over 50 Saccos in Kenya.

“Most commercial banks charge high interest on loans, the high rates are not affordable to most people.

But Saccos’ interest on loans is pocket friendly to the majority of members.

That is why they buy land from us and sell it to their members,” she told Money.

With increasing competition in land prices and scarcity of money, the idea of pulling resources together at affordable terms becomes appealing for potential customers.

“The two major issues to address while purchasing land from us are; distance from the tarmac road since all land-buying companies buy land during the dry season because nobody visits the plot during the rains.

Security also comes in; the first customer to settle on the land may put his family at risk, but he can also act as an assurance to other clients.”

Within the outskirts of the city, Kitengela and Isinya are among the fastest growing zones.

One of the Saccos that is offering its members a chance to invest in land is Chai Savings and Credit Co-operative Society.

Through its subsidiary, Chai Diamond Investment Limited, the Sacco has provided opportunities for members to invest in land within Kitengela and Isinya.

The company recently purchased 40 acres of land in Kitengela and 22 acres in Nakuru from Cretum Properties.

On demarcating it into one-eighth-of-an-acre plots, it managed to settle 446 members.

“We sold all the plots within two weeks and balloting was done the following month.

Our members are increasingly buying land because they have seen that it’s affordable through our Sacco,” said Grace Miano the chairperson of Chai Diamond Investment Limited.

The company plans expand and invest in Nanyuki, Bomet and Mombasa this year.

Already Chai Diamond Investment Limited has 1,000 registered shareholders who have bought shares worth Sh17 million.

Other Sacco’s that Cretum Properties works with are Athi River Develompent Authority Sacco, Stima Investment Sacco, Lukenya Sacco, Utabibu Sacco, Magereza Sacco, Rafiki Sacco among others.

Serviced plot

Ms Mungai says her company’s new project — Green Isinya City — which is to be launched on Saturday, May 31, has over 6,000 plots available.

This means the dream of owning a house for many Kenyans could inch closer to a reality at costs ranging between Sh700,000 for 50-feetx100-feet plot to Sh1.35 million for a quarter-acre residential piece of land.

A commercial plot would see potential buyers part with Sh2 million.

“The project would offer an opportunity to each member of the team to buy a serviced plot, build and own a home.”

And since some customers may face challenges raising the required amount, the company has a provision for potential buyers to make a deposit and then honour the balance within a period of time, say, six to 12 months.

Title deeds

“Due to the large number of Saccos, we are looking into the possibility of working with the International Finance Corporation to finance construction of the houses.”

The company also has an eye for virgin land in prime areas particularly those along major roads and close to key development zones in the country.

“We take responsibility of installing electricity and water, construction of feeder roads and ensure security in the land.

Already, the company has undertaken five successful projects within Mavoko Municipality and Thika Town.

These have been sold, title deeds processed and delivered to buyers”.

Less costly

Mr Charles Otieno, a Nairobi-based investment advisor, says that the increasing cost of living is making many people working in Nairobi and other major towns to find less costly ways of owning property.

“High price of buying land in Nairobi, particularly, along Thika Road, has made people, especially those who cannot afford or qualify for mortgage financing, scout for alternative and inexpensive means of buying land such as joining cooperatives,” he said.

For Green Isinya City, the project would have tarmacked roads, street lighting, perimeter wall and electric fence, schools, shopping mall and a police station, says Ms Mungai.

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