IFC Makes Equity Investment In Kenya Affordable Housing Project
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The IFC has signed off a US$20.7 million equity investment in South Africa-based International Housing Solutions (IHS) that will enable the fund to deliver 3,400 low-cost housing units in Kenya.
According to the IFC, the investment will support the development of affordable housing projects with an initial focus on the Nairobi metropolitan area and a minimum of 15% of the equity investment to be committed to other Kenyan counties.
The corporation says the deal involves an equity co-investment package along with IHS Kenya Green Housing Partnership and the IHS Kenya Green Housing Fund for the development and acquisition of an estimated 10,800 newly developed affordable housing units in Nairobi and other major urban areas in Kenya.
The IFC says IHS Kenya has a strong development pipeline of properties and links with developers who have promising pipeline and land opportunities. The developments will typically be around 350 units of modest size (e.g. two-bed, one-bath units measuring less than 55 square metres) in a secure estate with onsite amenities such as playgrounds and open areas, as well as close access to schools, retail, transport and work opportunities.
Two development models are expected to be followed by IHS Kenya:
(a) Turnkey: A portion of these developments will be acquired on a turnkey basis, i.e. where a development partner constructs and is paid for the units once complete;
(b) Fixed-price: Other properties will be developed under a fixed-price contract with the contractor, with IHS Kenya managing the construction through a project management company.
Once completed and transferred, some units will be rented, others sold and an additional portion will be offered as rent-to-buy. The properties will be managed by IHS Property Management (IHSPM).
“This marks another significant IFC project in Kenya to expand the development of affordable housing and support the government to meet its goal to deliver 250,000 affordable housing units per year,” said Henrik Pedersen, IFC regional industry director in Africa for manufacturing, agribusiness and services.
IHS is a private equity firm focused on affordable housing in Africa, with operations across South Africa, Namibia, Botswana and Kenya. It is a wholly owned subsidiary of US-based Hunt Companies, a real estate and infrastructure fund manager.
Previously in 2023, IHS signed a purchase agreement to acquire 200 affordable, green housing units in Mi Vida Homes’ 237 Garden City development in Nairobi.
In September 2023, ConstructAfrica reported that Kenyan developer Centum Real Estate (CRE) had secured a US$20 million loan from the IFC to finance the construction of 1,940 affordable housing units in its Two Rivers development in Nairobi.
According to Kenya’s draft 2024 budget policy statement dated 18 December, 46,792 affordable housing units are under construction in the country and another 40,000 units are ready to commence construction. A total of 746,795 housing units are in the pipeline.
Photo: Agreement signing ceremony (Source: LinkedIn @IFC)
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