By David Odongo
Octagon Pension Services and Ark Property Consultants have organised a
one-day conference that will see retirement pension associations and
property developers meet to network, share, and discuss investment in
real estate.
The conference, to be held on October 12 at Serena Nairobi, has
received attendance confirmation of more than 100 pension schemes
associations and members drawn from Kenya Property Developers
Association.
“Pension schemes have the money, but we have developers who have the
ideas and the skills. The idea is to bring them together to invest in
real estate,” says Fred Waswa, Octagon Pension Services Managing
Director.
He reveals that pensions schemes in Kenya have a cumulative asset
base of Sh500 billion, yet less than ten per cent of the amount is
invested in real estate.
The pension industry regulator, the Retirement Benefits Authority,
allows pension funds to invest up to 30 per cent of their assets in real
estate, a move that helps diversify investments.
“All pension funds have about 30 per cent, and this works out to
about Sh150 billion. This money, if injected into real estate, can
drastically reduce the severe housing shortage experienced in Kenya,
especially in urban areas,” said Waswa.
Of late, pension schemes have been attracted by high and consistent
returns in the property market, and few of the cash rich schemes have
set up projects in real estate.
Kenya Commercial Bank’s pension fund constructed a Sh2.1 billion
building dubbed KCB Plaza in Upper Hill, Nairobi, joining other big
pension funds like Kenya Power and Lighting and Kenya Ports Authority
that have lately set up big housing projects in Nairobi.
High returns
Waswa says that high and consistent returns are the main attraction
for pension funds. “It is time for all major pension funds to consider
investing in the property market because the returns are high and
assured,” said Reginald Okumu, the managing director of Ark Consultants.
Analysts say Kenya’s high population — which grows by one million
people per year — and the inadequate supply of housing, is set to hold
the rally in property prices in the medium term, helping to boost
returns for investors.
According to a recent study by HassConsult and Stanbic Investment
Management Services, returns on property investments in the past decade
have beaten all other investment channels.
The value of a property bought at the beginning of the decade has
grown 2.83 times compared to a growth of 2.42 times for a diversified
portfolio shares at the Nairobi Stock Exchange.
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