- The International Finance Corporation (IFC), is providing a $20 million loan to Centum Real Estate for the development of the Mzizi Court project.
- Centum Real Estate, has shown a significant improvement in its financial performance, reporting a profit of Sh174 million in the year to March 2023.
- Centum Real Estate has a vision to develop 9,908 additional housing units in Two Rivers, which will significantly contribute to addressing Kenya’s growing housing deficit. The project is set to be completed in 2024.
In a significant boost to Kenya’s housing sector, the International Finance Corporation (IFC), the private investment arm of the World Bank, has announced plans to extend a $20 million loan to Centum Real Estate. This financing is earmarked for the development of the Mzizi Court project, a part of the Two Rivers Development in Nairobi’s Diplomatic Blue Zone.
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IFC’s Strategic Investment
The IFC’s support is particularly crucial as it addresses a gap in long-term debt funding that is often perceived as high risk by commercial investors. The total budget for the Mzizi project stands at an estimated $91 million, of which $20 million will be covered by the IFC loan.
The remaining $71 million will be sourced internally by Centum Real Estate, utilizing a combination of existing equity, buyer deposits, and reinvested profits from completed units.
“The proposed IFC investment is an up to $20 million a loan to support Centum Real Estate…to finance its development of 1,940 affordable housing units in Two Rivers Development, a prime mixed-use urban node located within Kenya’s Diplomatic Blue Zone in northern Nairobi,” stated the IFC in its disclosure.
Strategic Milestones for Centum
Centum Real Estate, a subsidiary of Centum Investment Company Plc, has recently seen an upturn in its fortunes, reporting a profit of Sh174 million in the year to March 2023, a significant improvement from the restated net loss of Sh486.9 million recorded the previous year. This resurgence was driven largely by substantial unrealized gains on its investment properties.
Furthermore, the company’s revenue from the sale of residential units increased to Sh1.9 billion, with 222 units sold during the review period. This represents a slight decrease from the 304 units sold in the preceding year. The boost in sales is expected to be further propelled by the recent award of a special economic zone (SEZ) license to Centum, covering more than half of the Two Rivers Development.
The SEZ designation positions Centum to take advantage of business-friendly regulations, attracting global service companies.
The Two Rivers Development, spanning 102 acres on Limuru Road in Nairobi, is strategically located near affluent neighborhoods, making it an attractive prospect for both investors and potential residents.
This move by the IFC underscores its continued commitment to investing in Kenya’s economic landscape. Over the past months, the institution has allocated substantial funds to various Kenyan companies, solidifying its reputation as a prominent foreign institutional investor in the local market.
Addressing The Housing Deficit
Phase one of the project began in March 2022 and is scheduled for completion by March 2024, encompassing 271 units. As of now, all units in phase one have been sold, and construction is currently at the 14th floor out of 18. Centum RE has initiated sales for phase two, utilizing funds from both sales and an IFC loan to progress the project.
The project consists of a total of 270 apartments, ranging from one to three bedrooms, all competitively priced starting at Ksh 4.9 million . A flexible payment plan is available for potential buyers.
Phase two is now underway, with prices starting at USD 54,000, and it is anticipated to be finished by December 2024. Upon project completion, 80% of the units will have been sold, at which point Centum will transition management to a third-party contractor for the initial operational phase. Subsequently, homeowners will establish a property management company to oversee ongoing operations.
Looking ahead, Centum Real Estate envisions the development of 9,908 additional housing units in Two Rivers, which will play a pivotal role in addressing the growing housing deficit in Kenya. This ambitious undertaking reflects Centum’s dedication to providing affordable and accessible housing solutions for the country’s expanding population.