Through the Nairobi Stock Exchange (NSE), a reasonable amount of funds have been locally mobilized for the housing sector. This has been achieved through the issuance of bonds and shares by various housing finance lenders. Housing Finance Company Kenya (HFCK), one of the traditional providers of mortgage finance, has a bigger loan than deposit portfolio. The company typically bridges this gap by drawing on a combination of equity and lines of credit. However, this has proven to be an expensive and unsustainable way of funding the mortgage book. Whereas equity provides the cheapest source of funding, the company could not issue new mortgages without careful planning due to the resultant dilution of its existing shares. Kenya has a vibrant pension sector comprising of 1,350 licensed pension schemes. The sector, the most developed in the East African region, presents an enormous opportunity for long-term capital to the housing sector.
The report presents an in-depth analysis of the landscape of investment in Kenya. It provides useful data on existing DFI investors, the type of instruments they use to invest and the investment environment they operate in. The report forms part of The Centre for Affordable Housing Finance’s Investor Programme which aims at quantify the breadth of investment activity with respect to housing and housing finance across Africa, and to establish a mechanism to track this on an ongoing basis. This project has collected data and highlights gaps and opportunities in the investment landscape. With the aim of stimulating greater investment in affordable housing and connecting investors with potential investments, the report profiles investors and investment instruments with the greatest impact on the housing finance market within the EAC Region. Growing financial sector experience and increasingly sophisticated financial instruments are driving Investor interest in African real estate. This includes new market opportunities related to a rising urban middle class, an increasingly localized construction material industry and innovations in housing finance such the emergence of Real Estate Investment Trusts and mortgage liquidity facilities across Africa.