CPF Financial Services, the administrator of pension funds, is negotiating with four counties to build affordable housing as part of its effort to promote real estate investment.
As of December 2021, the institution overseeing Sh68.2 billion in assets is looking to build homes in Laikipia, Nakuru, Nairobi, and Mombasa.
The National Treasury only permits pension companies to invest or provide debt financing in housing developments totaling up to 10% of their asset portfolio.
According to Mr. Joseph Rono, director of CPF strategy, finance, and investment, CPF is talking with the four counties to firm everything up.
“We are still in conversations with the counties and need to finalize it. The market exists for these products. Only Nairobi has an oversupply of homes, according to our feasibility assessments.” Rono said.
The allocation of less volatile and long-term assets, such as real estate, bonds, and infrastructure, by institutional investors like pension funds and insurers, has been growing.
This occurs when their stock market holdings value has fallen precipitously since the Covid-19 economic shock, causing a large market selloff and a consequent decline in share price.
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A project to build 1,394 affordable housing units in Kisumu through CPF’s LAPTRUST plan was launched in 2020, however, it was delayed due to difficulty finding contractors and the high cost of construction materials.
It took 48 months to construct and prepare for occupancy of the Sh3.8 billion redevelopment at the former Anderson-Ofafa estate.
The development of infrastructure, including water and sewer lines, requires a contract with the counties.
The price of the units is anticipated to be Sh1.5 million for a one-bedroom unit, Sh2.5 million for a two-bedroom unit, and Sh3.5 million for a three-bedroom unit (three-bedroom).
In addition to Salih, a segregated fund within CPF, CPF Financial Services also manages Laptrust, County Pension Fund, CPF Individual Pension Scheme, and Laptrust Trust.
