Kenya's Housing Finance eyes more funding
NAIROBI (Reuters) - Kenya's Housing Finance (HFCK.NR) is looking to raise more funds in the second half of this year and increase mortgage lending as it expects last month's peaceful elections to spur demand for houses.
Kenya's second biggest mortgage lender said it would finalize plans for more funding in the next few months, having sold the last tranche of a 10 billion shillings ($118.5 million) bond last year.
The election last month allayed fears the east African country would descent into chaos again as in the last election five years ago, and led to expectations of lower interest rates and higher consumer spending.
"We will be looking to raise more money. Either we will do it locally or offshore or both," Chief Executive Frank Ireri told the Reuters Africa Investment Summit on Thursday. He did not say how much Housing Finance was planning to raise.
The company, which is involved in housing development as well as finance, is eyeing a bigger share of Kenya's booming housing market and also a maiden entry into other regional countries.
Ireri said Housing Finance would use different strategies in other east African markets due to the small size of their financial sectors.
"You can't go into south Sudan and give someone a 15-year loan today," he said.
A rising middle class in Kenya has meant demand for housing has outstripped supply for decades, and the sector has outperformed other asset classes such as stocks and bonds with annual returns of up to 30 percent.
Housing demand is also expected to receive a big boost in coming years from recent oil and gas discoveries in the region.
"I think we're going to see a lot of foreign investors coming in to the property space," Ireri said, adding he expected property investments to rise in the second or third quarters of this year.
Mortgage uptake has remained very low in the region, he said, hindered by high interest rates, high cost of accessing loans, and the bureaucratic difficulty of getting land ownership deeds that lenders require as collateral.
There are less than 20,000 mortgage accounts in Kenya, a nation of more than 40 million people.
Housing finance, which controls 35 percent of the Kenya's mortgage market, is also planning to list real estate investment trusts (REITs) on the Nairobi bourse.
Kenya's capital markets authority is working to introduce REITs, high-yielding securities that trade like stocks.
"The impending introduction of REITs may boost it (real estate earnings) even further," Ireri said. ($1 = 84.4000 Kenyan shillings)
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(Editing by George Obulutsa and Clelia Oziel)