Investors have snapped up 104 apartments along State House Road, Nairobi, less than two weeks since the National Social Security Fund put them up for sale.
NSSF managing trustee Richard Lang’at said 114 applications were received for the three-bedroom apartments that were being sold off-plan at Sh31 million and Sh35 million for those with servant quarters.
“We are not short of cash, but when doing a project you need a guarantee that it will sell,” said Mr Lang’at. Some of the applicants have also paid a deposit, reflecting demand for property in prime addresses even as the general market stabilises.
The apartments are being built on a 3.5-acre piece of land located across the Fund’s Milimani head offices at an estimated cost of Sh1.6 billion. A swimming pool, gymnasium and sauna will also be constructed.
The project, earmarked for completion in May next year, will fetch the pension fund at least Sh3.2 billion. The introductory offer price was valid until the end of this month.
The executive apartments mark a departure from the Fund’s focus of developing commercial buildings and homes for middle-income earners, such as Nyayo Estate in Embakasi.
The NSSF is currently seeking international partners to construct a 62-storey tower on its plot on Kenyatta Avenue in Nairobi for an estimated Sh20 billion.
The Fund, which owns 960 acres of land in Mavoko, Machakos, valued at Sh2 billion, plans to build 30,000 housing units, with shopping malls, recreational facilities and schools at an estimated cost of Sh80 billion.
A recent survey by real estate managers, Hass Consult, found that housing sales volumes rose in the first three months of the year, “but most markedly for cash-financed high-end properties”.
In contrast, the real estate market for middle-income earners has been almost flat with prices dipping in the second half of last year.
The slow uptake in the middle and low income earners has been attributed to high cost of mortgages which they have to rely on to finance purchases. The two levels, however, have the largest demand for housing.
As at end of last year, Kenya had 19,879 mortgage loan accounts worth Sh138 billion which meant that the average mortgage size was Sh6.9 million. The average interest rate charged on the loans was 16.4 per cent.
The housing purchase pattern will, however, be seen as enforcing the wide chasm between economic classes in the country.
NSSF is hoping to ride on the new contributory rates to boost its cash arsenal for capital intensive projects without breaching regulatory requirements. Pension schemes investments in real estate are not supposed to exceed more than 30 per cent of its total savings.
NSSF has been non-compliant in the past but increased collections will put it below the cap and give it headroom to launch the new projects.