A Russian developer has launched a multi billion dollar property development on the northern outskirts of Kenya’s capital Nairobi to cash in on a booming real estate market in east Africa’s biggest economy.
The Renaissance Group is targeting local and foreign investors as interest in Kenya’s real estate market grows due to strong market growth where the property sector has outperformed stocks in the past 10 years.
Growing incomes and large numbers of young people moving to urban centres are fuelling demand for housing across all asset classes and construction was the economy’s fastest growing sector in the second quarter of 2010.
Kenya’s population of 38.6 million is increasing by a million annually and Nairobi city authorities are expanding its boundaries to outlaying towns to ease pressure.
Renaissance Partners, the principal investment arm of Renaissance Group, will partner with Kenya’s Tatu City Ltd in the 50/50 joint venture project on 1,000 hectares on a former coffee farm outside the town of Thika, about 40 kilometers north of Nairobi.
It will house an estimated 62,000 residents and offer commercial and recreation facilities, including a football stadium with the first occupants due in 2012.
‘So far $100 million has been invested, $250 million will be invested for the next phase but over time it will be a multi billion dollar project. Within Africa, Kenya is one of the most dynamic economies. It has very fast economic growth and a fantastic investment climate for long term investors,’ Renaissance Group chief executive Stephen Jennings told Reuters.
Kenya’s economic growth is expected to reach about 6% in 2011 compared with a projected increase of 5% this year.
Jennings said he hoped the project would serve as a catalyst to foreign direct investment in sub-Saharan Africa. ‘There will be a few ups and down but Kenya’s political risk is coming down and the economic climate is improving. We are very excited and we are certainly not worried about Kenya,’ he added.
September saw the sharpest rise in property asking prices since January 2010, according to the Hass Property Index. Prices were up 8% year on year.