Mombasa booming real estate

 Mombasa booming real estate

Housing Finance has opened another branch in Mombasa as it seeks to gain from the booming real estate market along the Kenyan Coast, ranked as one of the most attractive globally.

The lender is banking on the new branch to attract mortgage borrowers and property developers as it seeks to extend its reach beyond Nairobi.

Mr Frank Ireri, Housing Finance’s (HF) managing director, said on Friday during the launch that the coastal property market had emerged as the second most attractive after Nairobi, with a huge potential for growth.

“The Coastal property market is now very vibrant, and we believe it offers HF big opportunities to grow its loan book,” said Mr Ireri.

Rising urbanisation and the emergence of a secondary homes market at the Coastal towns has led to a steady rise in housing demand, a factor that has caused a jump in property values over the past five years.

Real estate firm Knight Frank estimates that property values rose by an average of 20 per cent in 2011 in the major urban centers of Mombasa, Watamu and Malindi.

The hike was only slower than Nairobi, where prices rose by 25 per cent in prime real estate, according to Knight Frank, placing the two markets as the leading in Africa.

Developers are now rushing in to gain from the housing deficit and high profit margins, presenting lending opportunities for development financiers.
 “Our focus would be to grow our branch network to over 100 in the next five years,” Mr Ireri added.

HF has in the past year been extending its focus beyond the Nairobi market, opening two branches in the satellite towns of Kitengela and more recently, Rongai.

Mr Ireri said that a wider branch network would enable the mortgage lender to tap into customer deposits as a cheaper source of funding. This is what has enabled the large commercial banks to bear interest rate shocks easily.

The mortgage lender announced a drop in its profits for the first nine months as high financing costs ate into its profit margins owing to high interest expenses paid on corporate customers’ deposits. Big lenders such as KCB and Barclays are set to post record profits owing to their minimal interest expenses.

HF is now operating current accounts throughout its 11 branches and the 99 agencies offered by Postbank. It projects that this will help it attract cheaper customer deposits.

The shift is informed by an amendment on the law enacted last year that allowed mortgage providers to offer general banking services.
source http://www.businessdailyafrica.com