Saccos go big in real estate

By Jackson Okoth
Kenya’s booming real-estate sector continues to be a good hunting ground for co-operatives, who are taking advantage of cheaper financing options to buy land, residential and commercial buildings and transferring them to their members and the public.
At the end of the transaction, co-operatives make a tidy sum a kill in investment income translating to higher dividend pay out to members.
Housing co-operatives and Saccos are known to offer better lending rates than banks as they have to get members’ approval in the pricing unlike banks which are after profits.
“Housing Co-operatives play a critical role in the provision of Kenya’s housing needs and have been given a target of providing 25 per cent of all housing units in a year. The State, through the National Co-operative Housing Union, provides affordable credit to co-operatives involved in housing projects,” said Mr. Ali Noor Ismail- Principal Secretary, State Department of Co-operatives, Ministry of Industry, Trade and Co-operatives.
The Sacco Supervision Annual Report 2015 lists Mwalimu National at the top in terms of total asset size, totalling Sh 22,699,334,000 followed by Stima Sh15, 893,502,000, Harambee 13,401,222,855, Kenya Police Sh 11,808,374,000, Afya Sh 10,885,491,228, UNSacco Sh 7,777,889,283, Unaitas Sacco at Sh 9,286,190,170 and Ukulima Sh 9,212,277,075.
Leading investment and housing co-operatives that have gone big on construction of houses or land buying include Mwalimu National, Kenya Police, Stima, Afya, Ukulima, UNSacco and Unaitas. Other big hitters include Metropolitan, Imarisha, Kenya Bankers, Invest and Grow, Gusii Mwalimu, Bandari and Hazina.
“Investment co-operatives are able to identify land or property that is worth and genuine after doing the necessary due diligence before transferring it to members. Saccos provide credit facilities to members to allow them acquire land or property, which will be treated as collateral until the loan is fully repaid,” said Paul Wambua, former CEO of Stima Sacco.
Wambua said that an increasing number of Saccos are now going beyond providing credit facilities to members interested in acquiring land or houses to making available affordable mortgage facilities for those interested in putting up residential units or utilities such electricity and water.
“There is a huge potential in the property sector that Saccos are now exploiting and could pool resources to upscale their involvement further. Provision of housing is a major challenge in Kenya where an estimated 200,000 units are required per year while the market can only provide a paltry 20,000 units,” said Wambua.
He made these remarks in a telephone interview with Sacco Review, while in Dubai where he is doing international consultancy work for a leading microfinance company.
“Co-operatives offer competitive interest rates that are below market rates. These Sacco rates are also fixed and are calculated on a reducing balance. Saccos also enjoy economies of scale where they can purchase land in bulk, put up property and then sell as affordable prices to members,” said Wambua.
Stima Investment Co-operative Society Limited, a subsidiary of Stima Sacco is already seeking for more affordable long term financing options, which Wambua says, will allow it to engage in much bigger projects in order to benefit members.
Figures sent to Sacco Review indicate that Stima Investment Co-operative has an asset base of over Sh 2 billion, with shares trading at Sh 200 and a membership of over 10,000 members across Kenya and in the diaspora.
Stima Investment Co-operative has one of the largest real estate portfolios including plots in Lamu, Konza, Kitengela, Oseki Plains, Rongai, Nanyuki, Naivasha and Malindi. It also has residential houses for sale along Kangundo road, Nairobi. They include 2- Bedroomed apartments, 3- Bedroomed Maisonettes and 3- bedroomed bungalows.

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