Saccos ditch agriculture for better-yielding real estate

Thanks to a construction boom, co-operative societies, which previously focused on farming, or offering savings and credit facilities, are venturing into real estate.

Indeed, they are now among investors who are turning what was previously farmland into built-up commercial complexes or residential areas.

The societies acquire land at negotiated, relatively lower prices and sell it to individuals or carry out major projects, riding on the massive growth in the real estate sector over the past few years.

They act as property agents, develop property and engage in other value-addition services such as road works, as well as build residential houses and commercial centres.

They use the profits for further investment or share it out in the form of dividends, which has made them attractive to more and more people.

And with the desire to own property, middle- and low-income earners are finding societies an attractive option, thereby intensifying competition in the sector.

And as demand for land increases, old societies are re-branding to be able to participate in the real estate sector.

RECENT VENTURE

Kahawa Farmers Co-operative Society is a case in point. The society, which changed its name to Kamuthi Housing Co-operative Society in April 2010, abandoned coffee and dairy farming for the real estate sector.

Using members’ contributions or loans, the 7,000-member society buys land, which it then parcels out.

It recently ventured into gated community projects and is currently working on one in Kiambu County and another in Murang’a County.

In Kiambu, the society is putting put up a Sh1.8 billion gated community known as Buffalo Hills and Gold Village in Kilimambogo, Thika.

Mr Bernard Maina, the society’s chairman, said the project, which stands on 355 acres, comprises 750 homes standing on quarter and half-acre plots, and a nine-hole golf-course covering 108 acres.

It will also have a club house next to a man-made dam covering 9.5 acres within the golf village, with a swimming pool, game rooms, a sauna and gym, among others.

Meanwhile, in Murang’a County, Kamuthi is putting up Soya Village close to Soya Dam. The project comprises 2,300 houses standing on 400 acres in Gatanga.

MANAGEABLE INTEREST RATES
Located 10 kilometres from the Eastern Bypass, will include residential houses, commercial plots, and social services.

“We will have schools, hospitals, churches, playing fields and other public amenities,” Mr Maina said.

The society helps its members get funding to buy or build houses at manageable interests rates.

There is also Urithi Co-operative Society which, according to Chairman Samuel Maina, aims to address the challenges caused by the global recession, which has made it difficult for many people to own land and houses.

The Thika-based society is putting up a Sh1 billion real estate project, City Edge, on a 100-acre parcel of land in Thika. The project, which comprises 600 housing units, will be completed within two years.

It is also located near a proposed international cargo airport.

In addition, Urithi plans to build a Sh 800 million shopping mall on seven acres in Kikopey (along the Nairobi Nakuru Highway) known as La’Heriter Highway Mall.

The project will be funded through members’ contributions and loans.

DECENT HOUSING
The 4,000-member society’s other projects include Kitengela Olive Ostrich Gated Estate, Ruiru Stallion consisting of three-bedroom maisonettes in Thika, Olive Courts in Nakuru and Urithi Conference Centre in Thika.

Then there is the more recently transformed Angaza Real Estate Ltd, which is moving fast to venture into the real estate and hospitality industries.

The company was previously involved in land buying and property management.

Angaza Chairman Martin Kamau said that apart from increasing returns, the new-look outfit seeks to enable members to acquire affordable and decent houses.

“Apart from just buying and sub-diving land, we want to ensure that all our members own homes, and for a start, we will ensure that they acquire houses for as little as Sh3 million,” Mr Kamau told DN2.

The sharp increase in the value of property near urban areas and infrastructural development by the government in areas once considered remote has seen investors rush to these newly opened up areas.

Angaza currently has properties in Central, Rift valley and Coast regions, with its latest being in Nanyuki.

Mr Kamau said they are targeting other counties where vast tracts of land are still readily available and relatively cheap.

BETTER RETURNS
Mr John Mwaniki, the director of Jeckmas Services, a property agency with interests in Kiambu and Nairobi Counties, says it is the quick and better returns that are attracting more and more co-operative societies.

“The aim of a society is to make profits and give dividends to its members and with the increased costs of land and houses, as well as the increasing demand, most of them are registering afresh in order to switch to the industry, which has attracted many due to its high returns,” Mr Mwaniki says.

And it is in this regard that perhaps the case of Thuo Investment, which deals in land, is particularly remarkable.

According to its Chairman, Mr Joseph Thuo, the society had only 13 members when it was formed in but now boasts a membership of 17,000.

It has 21 parcels of land in various places including Thika, Kitengela, Ngong, Murang’a, Nyeri, Nairobi and Embu.

“We buy land wherever it is available and affordable, sub-divide it among our members and sell the rest to non-members,” Mr Thuo said.

Ufanisi Ventures Housing Cooperative is another society whose objective is to enable people to buy affordable land and invest.

The society deals in land, real estate and property management, and also offers surveying and conveyance services.