* To put up 162 houses, sell below market value
* Has capital from retained earnings, rights issue
NAIROBI May 9 Kenya's sole specialist mortgage
lender Housing Finance will develop a housing project
in the next two years to create additional income from
properties aimed at low and middle income earners, it said on
The east African nation of 40 million people has a massive
housing deficit with annual demand at 250,000 units against
supply of around 60,000 units.
Housing Finance's Managing Director, Frank Ireri, said the
construction of 162 units in the eastern part of the capital
would cost 800 million shillings ($9.6 million), partly funded
from the bank's internal resources.
"Housing Finance intends to raise its involvement on the
supply side of residential middle and lower income housing,
which will in turn create significant mortgage lending
opportunities for the company," he said.
It plans to sell the houses at 15 percent below market value
to attract low and middle income earners faced with high credit
costs after commercial banks' interest rates leapt to 25 percent
from 15 percent in October last year.
The jump in lending rates caused demand for mortgages to
fall i n the first quarter, curbing Housing Finance's earnings
A property boom in east Africa's largest economy in the last
decade, thanks to the burgeoning middle class, led to bloated
house prices, leading buyers to struggle to meet high funding
Housing Finance stopped developing houses 13 years ago due
to lack of adequate capital.
Ireri said retained earnings over the years and its rights
issue in 2008 which raised 2.3 billion shillings had helped to
build its capital reserves.
($1 = 83.3500 Kenyan shillings)
(Reporting by Beatrice Gachenge; Editing by Duncan Miriri and