@BusinessDaily

Banks, pension schemes top finance sources for real estate

2 months ago, 11 Oct 08:25

By: Constant Munda

Bank loans and retirees’ savings remained the largest finance sector source of funds for property developers and homebuyers in 2017, fresh statistics show, amid declining average house sales and rent prices.

Commercial banks increased their investment in real estate by Sh87.56 billion last year, the highest allocation in a single year, despite the September 2016 legal ceiling on loan charges.

That brought banks’ total loans in the sector - whose growth slumped to a six-year low in 2017 - to Sh371.65 billion, data from central bank’s stability report shows.

However, despite a 30.82 per cent growth in financing from lenders last year, CBK notes that backing for real estate has continued to grow outside the banking sector.

“While Saccos have focused on funding land purchases and construction of residential houses for their members in urban areas, through investment units, local pensions institutional funds like National Social Security Fund (NSSF), insurance companies and pension funds, have also invested substantial amounts in real estate, without resorting to bank loans,” the financial sector regulators say.

Pension schemes were the second biggest financiers after banks, injecting Sh48.30 billion fresh funds in the sector to close 2017 with a portfolio of Sh226.72 billion. Funding by insurers rose by Sh2.8 billion to Sh76.04 billion largely on account of the 33-storey Old Mutual Towers office block, while private equity firms cut their cash holding by Sh12.79 billion to Sh83.15 billion.

A confluence of dwindling returns, jitters as a result of prolonged bruising presidential poll and a credit crunch for individual borrowers hurt growth in real estate (land and building property) sector in 2017.

The construction sector, where property market accounts for a large share, grew by 8.6 per cent, recent data from the Kenya National Bureau of Statistics showed, the slowest pace in six years.

The slowdown in the property sector was mirrored in other related industries such as cement whose consumption fell by 8.3 per cent to 5.79 million tonnes, official data indicates.

Housing has been one of Kenya’s fastest growing sectors in the last decade, with returns from real estate outpacing equities and government securities.

The property market, however, suffered a nosedive in sales and rental prices in 2017, sustaining a trend which started in mid-2006, according to separate quarterly surveys by consultancy HassConsult and the Kenya Bankers Association.

Finance sector regulators say house selling prices reduced by about 4.1 per cent in the fourth quarter of 2017 due to large stock of unsold units.


Read More


Category: business opinion news corporate economy lifestyle markets

Suggested

14 hours ago, 18:06
@BusinessDaily - By: Mwangi Muiruri
Nyandarua in Sh400m potato factory plan

Nyandarua County has set aside Sh400 million for construction of a potato value-addition plant at Shamata. Governor Francis Kimemia said the project will commence in January with a completion date of ...

Category: business news opinion
14 hours ago, 18:05
@BusinessDaily - By: Patrick Alushula
Lobby sees revenue loopholes in treaties

East Africa Tax and Governance Network says double taxation agreements (DTAs) between Kenya and other countries come with little disclosure and may be exposing the country to tax leakages. ...

Category: business news opinion
14 hours ago, 18:05
@BusinessDaily - By: Charles Mwaniki
Treasury back in market for Sh14bn after initial bond flop

The Treasury is back in the market with a Sh13.8 billion tap sale for this month’s bond issue, after the initial sale was undersubscribed by 28 percent. ...

Category: business news opinion
19 hours ago, 12:58
@CITIZENTV - By: Citizen Reporter
PS Boga denies reports of Ksh.3K for maize farmers, demands apology

Maize farmers will be paid Ksh.2,300 and not any other amount as reported by sections of the media, the Government has said. ...

Category: topnews news business
15 hours ago, 16:20
@BusinessDaily - By: Kiragu Kariuki
LETTERS: Goat farming can help tackle food insecurity

Frequency in drought occurrence and climate change have constrained both agricultural and livestock production sectors exposing many households to food insecurity yearly. ...

Category: business news opinion
15 hours ago, 16:20
@BusinessDaily - By: Tom Mulwa,
MULWA: Time to plan for health needs after retirement

Life after retirement comes with special health-related challenges. ...

Category: business news opinion

@BusinessDaily

Banks, pension schemes top finance sources for real estate

2 months ago, 11 Oct 08:25

By: Constant Munda

Bank loans and retirees’ savings remained the largest finance sector source of funds for property developers and homebuyers in 2017, fresh statistics show, amid declining average house sales and rent prices.

Commercial banks increased their investment in real estate by Sh87.56 billion last year, the highest allocation in a single year, despite the September 2016 legal ceiling on loan charges.

That brought banks’ total loans in the sector - whose growth slumped to a six-year low in 2017 - to Sh371.65 billion, data from central bank’s stability report shows.

However, despite a 30.82 per cent growth in financing from lenders last year, CBK notes that backing for real estate has continued to grow outside the banking sector.

“While Saccos have focused on funding land purchases and construction of residential houses for their members in urban areas, through investment units, local pensions institutional funds like National Social Security Fund (NSSF), insurance companies and pension funds, have also invested substantial amounts in real estate, without resorting to bank loans,” the financial sector regulators say.

Pension schemes were the second biggest financiers after banks, injecting Sh48.30 billion fresh funds in the sector to close 2017 with a portfolio of Sh226.72 billion. Funding by insurers rose by Sh2.8 billion to Sh76.04 billion largely on account of the 33-storey Old Mutual Towers office block, while private equity firms cut their cash holding by Sh12.79 billion to Sh83.15 billion.

A confluence of dwindling returns, jitters as a result of prolonged bruising presidential poll and a credit crunch for individual borrowers hurt growth in real estate (land and building property) sector in 2017.

The construction sector, where property market accounts for a large share, grew by 8.6 per cent, recent data from the Kenya National Bureau of Statistics showed, the slowest pace in six years.

The slowdown in the property sector was mirrored in other related industries such as cement whose consumption fell by 8.3 per cent to 5.79 million tonnes, official data indicates.

Housing has been one of Kenya’s fastest growing sectors in the last decade, with returns from real estate outpacing equities and government securities.

The property market, however, suffered a nosedive in sales and rental prices in 2017, sustaining a trend which started in mid-2006, according to separate quarterly surveys by consultancy HassConsult and the Kenya Bankers Association.

Finance sector regulators say house selling prices reduced by about 4.1 per cent in the fourth quarter of 2017 due to large stock of unsold units.


Read More

Category: business opinion news corporate economy lifestyle markets

Suggested

14 hours ago, 18:06
@BusinessDaily - By: Mwangi Muiruri
Nyandarua in Sh400m potato factory plan

Nyandarua County has set aside Sh400 million for construction of a potato value-addition plant at Shamata. Governor Francis Kimemia said the project will commence in January with a completion date of ...

Category: business news opinion
14 hours ago, 18:05
@BusinessDaily - By: Patrick Alushula
Lobby sees revenue loopholes in treaties

East Africa Tax and Governance Network says double taxation agreements (DTAs) between Kenya and other countries come with little disclosure and may be exposing the country to tax leakages. ...

Category: business news opinion
14 hours ago, 18:05
@BusinessDaily - By: Charles Mwaniki
Treasury back in market for Sh14bn after initial bond flop

The Treasury is back in the market with a Sh13.8 billion tap sale for this month’s bond issue, after the initial sale was undersubscribed by 28 percent. ...

Category: business news opinion
19 hours ago, 12:58
@CITIZENTV - By: Citizen Reporter
PS Boga denies reports of Ksh.3K for maize farmers, demands apology

Maize farmers will be paid Ksh.2,300 and not any other amount as reported by sections of the media, the Government has said. ...

Category: topnews news business
15 hours ago, 16:20
@BusinessDaily - By: Kiragu Kariuki
LETTERS: Goat farming can help tackle food insecurity

Frequency in drought occurrence and climate change have constrained both agricultural and livestock production sectors exposing many households to food insecurity yearly. ...

Category: business news opinion
15 hours ago, 16:20
@BusinessDaily - By: Tom Mulwa,
MULWA: Time to plan for health needs after retirement

Life after retirement comes with special health-related challenges. ...

Category: business news opinion
Our App