Government has engaged local pension funds to participate in the Affordable Housing Program to help unlock value from their illiquid land assets, the Cabinet Secretary Ministry of Lands, Public Works, Housing and Urban Development, Zachariah Njeru has said.
Through the program and the capital markets they can convert underutilised land into profitable cash generating developments.
The Ministry through the State Department for Housing and Urban Development has been a key driver of the Real Estate Investment Trust (REIT) discussion and has been working closely with the Capital Markets Authority and Nairobi Securities Exchange on the development of innovative investment products to support affordable housing.
The CS was speaking during the bell ringing ceremony to mark the listing of the Local Authorities Pension Trust (LAPTRUST) Imara Income Real Estate Investment Trust on the Nairobi Securities Exchange on Wednesday.
He said the ministry has recently engaged a panel of financial experts and transaction advisors to develop these REITs and other innovative financing instruments with the goal of successfully bringing together viable investment opportunities with the country’s development agenda.
“The Ministry recognises that the real estate investment trust structure is an ideal fit not only to raise the considerable finances for development but also to support the rent-to-own (tenant purchase scheme) home ownership model for Kenyans at long term affordable rates. ” The CS said.
Adding that: “The REIT structure is also suitable for the financing and delivery of much needed affordable student housing for our universities countrywide and institutional housing for our police and defense forces.”
The affordable housing program is designed to provide decent, accessible yet affordable housing for all Kenyans especially those living in informal settlements.
While noting that the government has made tremendous progress in the achievement of the 200,000 affordable housing units annually, CS Njeru stressed that the 2010 constitution emphasises on the right for every person to accessible and adequate housing and reasonable standards of sanitation.
He noted that the Kenya Kwanza manifesto is committed to affordable housing for all Kenyans.
Similarly he said the government is partnering with the private sector on the delivery of affordable housing which has become an attractive investment opportunity through the provision of land countrywide, tax incentives such as VAT exemptions and preferential corporate tax, and the aggregation and financing of buyers via the Boma Yangu platform and the Kenya Mortgage Refinance Company (KMRC).
” The private sector investment in affordable housing is return driven and can be supported ably by capital market instruments like REITs and green bonds which provide the investment liquidity required.” He added.
Through the capital markets the local private sector investors can participate in affordable housing and this participation will catalyse further interest from international investors.
The Ministry through the State Department for Housing and Urban Development has been a key driver of the Real Estate Investment Trust discussion and has been working closely with the Capital Markets Authority and Nairobi Securities Exchange on the development of innovative investment products to support affordable housing.
By Fred Azelwa.