East Africa’s leading real estate developer; Centum Real Estate, is now looking to interest investors and potential homeowners, with one bedroom houses worth 4 million Kenyan Shillings and situated at Ngong road and Mombasa road.
The move is being seen as the real estate developer’s strategy for increasing its revenues after it experienced a drop in its half year profits.
According to reports, Centum Real Estate which is a subsidiary of Centum Investment Company, is looking to get into Joint Venture (JV) agreements with land owners for the building of housing units along Ngong road after Junction Mall, and along Mombasa road.
With the proposed Joint Venture (JV) agreements the land owners will be providing the land required, as equity. The land owners will also create a special purpose vehicle for profit sharing.
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Centum Real Estate believes that the strategy will aid in the reduction of overall costs for development after making it known that it had experienced a 71.7 percent reduction in its net profit to 650.4 million Kenyan Shillings for the financial year which ended on the 31st of March 2021, as a result of a drop in the demand for residential units due to the negative impacts the still ongoing Coronavirus pandemic had on the economy.
The Managing Director of Centum Real Estate; Mr Samuel Kariuki made it known that, “We started the market validation and we are scouting for joint venture. We will not buy the land but the owner will provide it as upfront and form a special purpose vehicle for profit sharing. The land owner will contribute the land as equity while Centum will finance the construction.”
Mr Samuel Kariuki added that, “The value of the land will be a factor and each case will be structured differently.”
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The projects will have one bedroom to three bedroom houses that will be priced anywhere from 4 million Kenyan Shillings to 7 million Kenyan Shillings.
In the words of Centum Real Estate’s Managing Director, “The area before Junction Mall it usually high-end and we are looking at affordable units not different from what were are providing in other areas.”
Centum Real Estate has already successfully reached a similar agreement with Crossnet Limited, for the construction of a pavilion, and an apartment complex with 950 units in Ruaraka along Thika Road.
The move by Centum Real Estate is coming at a time when the high market supply of residential and spaces commercial, is not matching the subdued uptake.
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