Pension scheme, property developers’ conference

PHOTO | FILE This is the plot on which the NSSF plans to set up an ultra-modern conference centre.  NATION MEDIA GROUP

 

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.