Money Markets
NSSF’s Nyayo Estate in Embakasi, Nairobi. The valuation of this estate reduced to Sh1.77 billion from Sh9.32 billion. File
By CHARLES MWANIKI
In Summary
- The regulator has fought a long battle to enforce compliance by the statutory pension fund, with NSSF arguing a quick divestiture would flood the property market.
National Social Security Fund (NSSF) has for the
first time complied with the rule capping real-estate holdings to 30 per
cent of total investment portfolio.
Following a reclassification of its Nyayo Estate in Embakasi
to a tenant purchase scheme, NSSF cut its combined land and property
holdings to Sh29 billion, representing 22 per cent of its total
investment portfolio of Sh135 billion.
The property valuation of Nyayo Estate Embakasi
reduced to Sh1.77 billion in June 2013 from Sh9.32 billion in 2012, as
per an NSSF gazette notice published Friday.
“We now meet the regulatory requirement. The Tenant
Purchase Scheme for Nyayo Estate phase four and phase five now falls
under the investment class labelled ‘Other Investments’ as per the
Retirement Benefits Authority classification,” said NSSF managing
trustee Richard Lang’at.
The regulator has fought a long battle to enforce
compliance by the statutory pension fund, with NSSF arguing a quick
divestiture would flood the property market. In the year ending June
2012, the NSSF land and property investment stood at Sh35 billion,
representing 32 per cent of its entire portfolio of Sh110.93 billion.
Previous NSSF administrations put in substantial
funds into long-term real estate projects, making it difficult for the
fund to cut its holdings levels. Effort to comply were also being
hampered by the rise in valuation at a time when the real estate sector
has been booming.
NSSF hopes to ride on new contributory rates to
boost its cash arsenal for capital-intensive projects without breaching
regulation. Other than the expected cash boost, NSSF plans to use a
joint venture approach with private investors in its real-estate
projects to reduce its contribution in such developments.
NSSF has previously announced it will use this
approach with international partners to construct a 62-storey tower on
its plot on Kenyatta Avenue in Nairobi for an estimated Sh20 billion.
The fund also plans to build 30,000 housing units with shopping malls,
recreational facilities and schools at an estimated cost of Sh80 billion
on its 960-acre land at Mavoko, Machakos.
Last month, it announced that investors took up 104
apartments along State House Road, Nairobi, less than two weeks after
the Fund put them up on sale.
According to Mr Lang’at, 114 applications were
received for the three-bedroom apartments that were being sold off-plan
at Sh31 million and Sh35 million for those with servant quarters,
reflecting demand for housing units at prime locations near the city
centre.
NSSF’s lower percentage of property holdings has
also been helped by a substantial increase in the value of its quoted
equity investment.
According to the disclosure, the value of quoted
securities rose by 40 per cent to Sh51.1 billion from Sh36.3 billion in
2012, a trend observed across all pension fund managers in line with the
high returns in the stock exchange last year
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