Nairobi investors now eyeing Coast

Nairobi-based real estate and equity firms have expressed interest in investing at the Coast, a market that has in the recent past been shunned by investors due to security concerns.

Fusion Capital, a real estate developer and financier, and private equity firm Cytonn Investments, are some of the companies that are putting their money in the coastal region.

While Fusion has competed the first phase of a Sh1.3 billion project, Cytonn intends to invest Sh5 billion in a number of properties including apartments, shopping malls and residential housing.

Fusion is putting up Marina Creekside Luxury Apartments, a gated community of 90 apartments at the Mtwapa Creek. The first block comprising 10 apartments is ready, with the project set for completion in the first quarter of 2017.

“The decision to get into the coast market was based on a go-county strategy, which was based on devolution, where we saw an opportunity with the expected emergence of a larger middle class in key towns, creating a need for decent housing and quality standard business premises,” says group executive officer Luke Kinoti.

STRATEGIC DESTINATION

“Besides, we believe that the Coast remains a strategic destination in East Africa, with a port which serves the region. The fact that it remains a tourism destination means we expect the middle class to continue growing, creating demand for housing,” he added.

Growth of the coastal property market has been slow due to recent terror attacks, but real estate stakeholders say the industry is beginning to recover. Mtwapa has become the new destination for luxury developments due to the relative calm.

Fusion invests in real estate projects through joint venture financing, where it partners with people who provide land while the firm funds the construction, manages the projects and markets them.

The luxury lifestyle market is targeted at first- and second-time home buyers, or those who want to buy holiday homes either for their own use or as an investment.

Mr Kinoti said they started investing at the coast at a time when there were attacks in Lamu and some parts of Mombasa, and decided to test the market by implementing the project in phases.

“The feedback from the market is positive, which has informed our decision to embark on phase two of the project comprising 80 units,” he said.

Two weeks ago, Cytonn Investments entered into a partnership with MySpace Properties, a Mombasa-based real estate company, in development projects worth Sh5 billion. Cytonn will secure funds from investors, while MySpace Properties will provide the land and market the developments.

Speaking to DN2 last week, the firm’s Chief Executive Officer, Mr Edwin Dande, said they had already identified one project worth Sh1 billion and are shopping for more partners to help them identify more opportunities.

“The project will be a mixed-use property for residential and commercial and is located in the North Coast,” he said, but declined to disclose its location.

He added that Cytonn would set up an office in Mombasa next year to take advantage of the growing business opportunities there.