Period: September 14 to 20, 2015

Banks raise cost of loans for high-risk borrowers

17/9/2015: Business Daily Page 1-4

• Commercial banks have ramped up the cost of loans in the wake of recent rise in the base lending rate.
• According to Central bank of Kenya data, the cost of loans rose by 0.5% in two months from 15.26 by the end of May to 15.75 by the end of July.

Prices of luxury residential properties in Nairobi goes up

17/9/2015: The Standard, Home & Away Magazine, page 2

• The prices of luxury residential properties in Nairobi have gone up by 0.9% in the second quarter of the year. This is notable turnaround from the previous quarter when the asking prices fell by 1%.
• The general feeling is that the market is moving upward and buyers are becoming more discerning and selective while the sellers are responding by installing better quality finishes.
• It is also anticipated that the significantly weaker shilling will draw more interest from international investors and Kenyans in the diaspora.

Prices of luxury residential properties in Nairobi goes up

17/9/2015: The Standard, Home & Away Magazine, page 2

• The prices of luxury residential properties in Nairobi have gone up by 0.9% in the second quarter of the year. This is notable turnaround from the previous quarter when the asking prices fell by 1%.
• The general feeling is that the market is moving upward and buyers are becoming more discerning and selective while the sellers are responding by installing better quality finishes.
• It is also anticipated that the significantly weaker shilling will draw more interest from international investors and Kenyans in the diaspora.

Kiambu county to demolish houses

17/9/2015: The Standard, Home & Away Magazine, page 5

The county government of Kiambu will no longer approve building plans on pieces measuring less than 0.0045 hectares. The county government also will demolish buildings sitting on plots measuring 40 x 50 feet.

Garden city Mall sees Ksh. 32 m savings from solar

17/9/2015: Business Daily, Page 7

• Garden city launched its new solar hybrid system launched on September 16, 2015, which will generate 1256 megawatts hours annually from the 3300 solar panels installed on the topmost car shade.
• The mall will use solar powered energy during the day. The mall will, however, use power from the national grid during the night and in the day in the event no power is generated during the day.

NEMA caps Environmental study fees to cut costs.

17/9/2015: Business Daily, Page 6

• NEMA director general said it will put a maximum cap on environmental impact assessment fees (EIA) in a bid to lower project costs.
• A proposed upper capping for major projects has been forwarded to the cabinet Secretary, Ministry of Environment and Natural Resources for consideration and gazettement.

Mortgages in Kenya

20/9/2015:Cytonn  Weekly Report no. 37

• According to Central bank of Kenya (CBK) the number of Mortgage accounts in Kenya was estimated at 22,013 as at December 2014, having increased by 2,134 or 10%, year on year from 2013.
• Despite the growth of mortgage accounts, the demand for mortgages is still very low with 15 mortgage lenders and a population of 43 million people.
• This is attributed to:
  • Low levels of income that cannot service a mortgage.
  • Soaring property prices
  • High-interest rates in the Market, with commercial banks offering mortgages at an average rate of 15%, with the most expensive at 18% and the cheapest being 12.9%
  • Expensive initial costs when taking a mortgage.
  • However with the increased urbanization and growth of the middle class in the country, there is need to look at better ways to address the housing issues in the country.
• This can be achieved by:
  • The development of infrastructure to open up satellite towns which will enable development in areas where land prices remain affordable.
  • Improved access to credit information and analytics to better price risk and also increased information on the market.
  • Deepen capital Markets products that promote real estate development for affordable segments. Since approval of ABS (Asset-Backed Securities) in 2007 and REITs in 2013, there is not a single product from either.

Real Estate Investment Trust (REIT)

20/9/2015:Cytonn Weekly Report no. 37

• Given the rising demand for real estate and the construction industry at large, we expect REITs to quickly gain traction as a viable investment option.Since the launch of REITs in 2013, there has been no product from REIT in the market.
• Since the launch of REITs in 2013, there has been no product from REIT in the market.Majority of the Kenyan Working population is in rental housing rather than owned housing.
• Majority of the Kenyan Working population is in rental housing rather than owned housing.Consequently the need to have a vibrant REIT market to provide financing for housing developers to serve the rental market by selling their developments on REITs.
• Consequently the need to have a vibrant REIT market to provide financing for housing developers to serve the rental market by selling their developments on REITs.