Britam Bets Big on Real Estate with Britam Properties

Britam Properties: Britam Holdings has initiated a diversification initiative aimed at reducing its investment in the money markets and increasing its focus on real estate, targeting a range of 20 to 30 percent of its asset mix, up from the current 16 percent.

The company’s strategic investments are anticipated to elevate its real estate portfolio to a value between Sh25-35 billion over the next decade. Notable projects include the construction of a Sh12 billion mall in Kileleshwa, the development of a 50,000 square-meter logistic park near Mlolongo, and the ongoing construction of serviced apartments in Kilimani, Nairobi.

Benson Wairegi, Britam’s Group Managing Director, revealed in an interview with journalists conducted two weeks after the firm’s AGM that the company intends to make property development and management its core business. This shift is underscored by the creation of a distinct business unit named Britam Properties (Kenya) Limited.

Britam Properties Projects

“Real estate consistently proves to be a lucrative investment, especially in prime areas where our focus lies in establishing these structures. The value of properties, particularly in sought-after locations, tends to appreciate over time. We are pursuing the development of a mall in response to the evident demand in Kileleshwa, where a notable absence of malls exists in close proximity,” stated Mr. Wairegi.

“The envisioned mall will be a mixed-use development, incorporating offices, serviced apartments, and a hotel. The overall project is valued at approximately Sh12 billion, inclusive of the land acquisition cost.”

Britam, a multifaceted company with interests in insurance, asset management, and property development, has invested in land totaling Sh10 billion. The company stands among prominent corporate investors seeking alternative avenues beyond the stock market for their investments.

Mr. Wairegi announced that the leasing process has commenced for spaces within the 32-storey Britam Towers, poised to become the third-tallest building in Africa, soaring to a height of 195 meters above ground level.

In addition to the ongoing leasing activities, the company is actively engaged in the development of serviced apartments in Kilimani and Hurlingham, residential projects in Mlolongo, and mixed-use developments in Ngong Township. Notably, Britam secured a financial injection of Sh3.5 billion from the International Finance Corporation, acquiring a 10.3 percent stake in the company.

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Britam is strategically aligning itself to capitalize on a growing trend wherein investors are shifting away from Treasury bonds towards the fixed asset class. This asset class has demonstrated an average capital appreciation of 24.3 percent over the last five years, particularly in areas designated for commercial use, including Kilimani, Upper Hill, and Westlands.

Serviced apartments, in general, are increasingly gaining prominence as a lucrative avenue in the real estate sector, offering enhanced annual yields on investments.

In the realm of serviced apartments, industry specialists note that developers, mainly hailing from the hospitality sector, are directing their focus toward non-resident Kenyans, expatriates, and even local investors. This segment proves attractive to investors due to its potential for both capital value appreciation and rental returns.

Over the past decade, real estate has emerged as one of the fastest-growing sectors, driven by the expanding middle class. Returns on investment in this sector have surpassed those of equities and government securities. The proliferation of shopping malls in Nairobi reflects a concerted effort by retailers to tap into a growing middle class characterized by disposable incomes and a limited range of leisure activities.