Business highlights – Investors make shift from loss making stocks into lucrative property market

Retirement funds invest in real estate as profits from stock market continue to decline

  • Kenyan pension funds are shifting their assets from the country’s stock market into real estate investments
  • The property market is offering returns of than 20% a year, at a time when Africa’s equity markets are losing value
  • Meanwhile, Kenya’s equity market that declined by 11.2% in 2016

Data to be presented at the East Africa Property Investment Summit in Nairobi on April 5 and April 6, 2017, shows that Kenyan pension funds have nearly tripled their real estate investments in the last eight years, moving into property development on a grand scale.

For pension funds fully invested in the Nairobi Stock Exchange at the beginning of 2015, the market’s decline had reduced their assets by almost 40% by the end of 2016, fueling an urgent focus on diversification.

Wangeci Kanjama, Trustee of the Safaricom Pension Scheme and Chair of the Real Estate Project Committee says pension schemes need to invest in real estate as part of a diversification strategy and with a view to reducing risk and complementing the overall returns to members.

READ ALSO: Real estate investments push Cytonn net profit up to Ksh630.8 million

Stanlib Asset Management, in its Africa’s Direct Property Investment Fund report, states that, currently, Africa’s real estate market has an estimated Internal Rate of Return of 25%.

Pension schemes in the country that have moved into real estate investments include the state owned National Social Security Fund (NSSF), the Kenya Ports Authority (KPA) – which has independently ventured into providing low cost affordable housing – the University of Nairobi Staff Pension Scheme, the Kenya Power Pension Fund (KPPF) and the Kenya Commercial Bank (KCB) Pension Scheme.

Nairobi data centre partners with British tech firm to boost ICT sector investments

  • The East African Data Centre (EADC) in Nairobi has announced it will host a new network point of presence (PoP) for British Telecom (BT), one of the world’s leading providers of communications services and solutions
  • The move ties in with the government’s master plan, which is supportive of the country’s ICT sector
  • It will ease the cost of doing business in Kenya, attracting multinational companies and direct foreign investment into Kenya as a gateway to East Africa

EADC General Manager, Dan Kwach says having access to local network PoPs allows global multinational entities to route traffic locally, helping them in leveraging Kenya’s booming economy as an entry point to the growing regional market. EADC has transformed data handling within East Africa, greatly reducing delay between points on a network, improving data services, and making the transfer of data across networks easier by being a carrier-neutral facility, housing telecom providers and ISPs.

EADC has transformed data handling within East Africa, greatly reducing delay between points on a network, improving data services, and making the transfer of data across networks easier by being a carrier-neutral facility, housing telecom providers and ISPs.

By opening a new network PoP at EADC, BT gives its multinational customers active in Africa the ability to further reduce latency in data flows by accessing its services in East Africa from a hub located in the region. The new PoP will support Internet, LAN services and Multiprotocol Label Switching (MPLS). BT will also be able to provide secure storage for business servers at EADC as well as hardware hosting for its international clients.

READ ALSO: ICT Authority moves to lower entry barriers for startups with launch of new landscape report

BT has been operating in Sub-Saharan Africa since 1992, delivering managed networked IT services for multinational companies operating in the region and providing expertise to the national operators to improve their retail and domestic market offerings to their respective citizens.

ERC okays plan for coal power plant despite protests from environmental activists

  • Kenya’s energy industry regulator has overruled environmentalists’ objections to Amu Power Company’s planned 1,000 megawatt (MW) coal-fired power plant in the coastal region
  • Environmental group, Save Lamu Natural Justice raised concerns about the effect the plant would have on marine life in the region
  • The project is part of a plan to add 5,000 MW of power to Kenya’s installed capacity by this year, up from a current 2,341 MW

The move is set to drive down the cost of power for consumers across the country

Amu Power, backed by a consortium that includes Centum Investments and a group of Chinese companies, was initially expected to begin construction of the plant in Lamu in December 2015. The environmental lobby group’s earlier protests had prompted the Energy Regulatory Commission to delay issuing Amu Power an electricity generation licence for the project.

 

Smoke billows from a coal-fired power plant

The Energy Regulatory Commission (ERC) said in a legal notice that it had reviewed the views of the group and other interested parties and was satisfied that all environmental concerns would be handled adequately. It also said that landowners who would be relocated to make way for the plant did not oppose the plant’s construction and that the government was handling their compensation.

READ ALSO: Lake Turkana Wind Power project on course to meet 2017 deadline

Construction of the plant is expected to take 30 months once it starts.

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