Firm eyes partnerships after inking Sh5b deal

Finsco Africa CEO John Mwaura (right) with Go Greenwood Bank President Ray Glover after signing a deal that will see the US-based lender fund Finsco Africa real estate projects.

Real estate firm Finsco Africa has urged developers to tap into the international market to access long-term capital, which is critical for rolling out affordable housing.

The firm’s chief executive John Mwaura said the demand for affordable and quality housing in Kenya remains high, with foreign investors eager to tap into this market due to the strong fundamentals and limited supply of such units.

Long-term capital available internationally has facilitated this influx of investment. Mr Mwaura said partnering with international financiers will create opportunities for Kenya’s real estate sector in the affordable housing space due to such partnerships.

 “The Kenyan housing market presents a unique opportunity for mutually beneficial investment. Many Kenyans struggle to access affordable mortgages, limiting homeownership,” said Mr Mwaura.

“At the same time, foreign investors possess long-term capital seeking strong returns. By bridging this gap, both Kenyans and foreign investors can achieve their goals.”

Finsco Africa recently signed a funding deal with Atlanta-based Go Greenwood Bank LCC, for onward long-term funding with a key focus on affordable housing targeting the lower and upper middle class.

The two firms signed a memorandum of understanding (MoU) where Greenwood Bank LCC committed to lending Finsco Africa Sh5 billion for affordable residential projects in Nairobi, Kiambu, Murang’a, Machakos, Kisumu, Eldoret, and Nakuru where the developer’s projects are domiciled.

 Go Greenwood Bank LCC said its foray into Kenya’s affordable housing space is an opportunity to invest while serving underserved markets locally and in the region.

“What is fascinating about this particular opportunity is that there are issues with minority communities across the globe, but I think using Kenya as a gateway to Africa we will be able to do the same things that we are doing in America here in Africa through Kenya,’’ said Greenwood Bank LCC President Ryan Glover.

 Go Greenwood Bank LCC invests in housing, infrastructure, renewable energy, technology, and agriculture. Other long-term foreign-based investors that have also entered the affordable and quality housing space include pension and private equity firms.

 In mid-June, IHS Kenya, a Private Equity fund manager, launched Sh1.2 billion green affordable housing development within the Tilisi Masterplan Development, Limuru.

 The government is currently planning to construct a total of 746,795 housing units, which are at various stages of development. Of these, 46,792 units are actively under construction, and 40,000 units are ready to begin construction.

 Kenya has an annual housing deficit of 250,000 units but the market can only deliver 50,000 units.

 His views are supported by data from the Central Bank of Kenya (CBK), which indicate that at the end of 2022, the average mortgage loan maturity was 10.9 years, ranging from five to 18 years.

 The average interest rate for mortgages in 2022 was 12.3 per cent, varying between 8.2 per cent and 17 per cent.

 “Long-term affordable capital is also beneficial to developers, who in turn can produce quality and low-cost houses for buyers,” Mwaura notes.