NAIROBI (Reuters) - Russia-based Renaissance Group on Tuesday launched a multi-billion dollar property development on the northern outskirts of Kenya’s capital to cash in on a booming real estate market in east Africa’s biggest economy.
Local and foreign investors are being drawn to Kenya’s property sector by returns which have outperformed stocks in the past 10 years.
Growing incomes and large numbers of young people moving to urban centres are fuelling demand for housing across all asset classes and construction was the economy’s fastest growing sector in the second quarter of 2010.
Kenya’s population of 38.6 million is increasing by 1 million annually and Nairobi city authorities are expanding its boundaries to outlaying towns to ease pressure.
Renaissance Partners, the principal investment arm of Renaissance Group, will partner with Kenya’s Tatu City Ltd in the 50/50 joint venture project.
The 1,000-hectare project, named Tatu City, will sprout up on a former coffee farm outside the town of Thika, about 40 km north of Nairobi.
It will house an estimated 62,000 residents and offer commercial and recreation facilities, including a soccer stadium. The first occupants are expected by 2012.
“So far $100 million has been invested, $250 million will be invested for the next phase but over time it will be a multi-billion dollar project,” Renaissance Group Chief Executive Stephen Jennings told Reuters after a ceremony to launch the project.
“Within Africa, Kenya is one of the most dynamic economies … you are going to have very fast economic growth. You have a fantastic investment climate for long-term investors.”
Kenya’s economic growth is expected to reach about 6 percent in 2011 compared with a projected increase of 5 percent this year.
Jennings said he hoped the project would serve as a catalyst to foreign direct investment in sub-Saharan Africa.
“There will be a few ups and down but (Kenya’s) political risk is coming down and the economic climate is improving. We are very excited and we are certainly not worried about Kenya,” he added.
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