Weak house sales nearly double Home Afrika loss

A slow down on growth of private sector credit is hurting real estate, which heavily relies on bank loans for unit purchases. FILE PHOTO | NMG 

By BRIAN NGUGI
More by this Author

Nairobi bourse-listed real estate developer Home Afrika sunk deeper in the red after posting a Sh346.2 million net loss for year ended December 2018.

This represents a 90 percent increase in losses compared to Sh181.7 million it recorded the year before.

The troubled firm blamed the worsened performance on lower sales in the local real estate sector on the back of rationed credit by banks.

Its revenues from contracts with customers dropped 58.51 percent to Sh109 million in the period from Sh262.7 million the year before.

“This is attributed to the impact of the slowed growth in the real estate sector amid constrained credit access and general slowdown in spending power among buyers which resulted to a decline in sales of plot and house buyers,” it said.

The firm confirmed another dividend drought for shareholders following the performance, declaring it will not pay out any dividends for the period.

A dip in prices and the slow uptake of newly-built units have raised fears of renewed pressure on developers, who borrowed to fund for-sale projects as obligations mature.

A slow down on growth of private sector credit is also hurting real estate, which heavily relies on bank loans for unit purchases.

Home Afrika recently issued a profit warning after delaying the release of the full year results for the period citing ongoing possible restructuring.

The firm on Wednesday said it is eyeing fresh capital injection from investors to turn around its fortunes.

“The process of fundraising has so far progressed very well. We are hopeful that this process will be successfully concluded shortly and the funding committed to by a strategic investor,” it said. “The directors remain confident of the underlying medium to long term value of the group’s land bank and therefore profit generation capacity in the periods ahead.”

Chinese investor Zeyun Yang, the developer of Great Wall apartments in Machakos, last year became the single largest shareholder in Home Afrika after acquiring an 8.2 percent stake.