Diaspora: New mortgage frontier
Kenyans living in the diaspora are emerging as the new battle front for local mortgage firms itching to grow their respective market shares as competition hots up.
This became apparent last week after the Kenya Commercial Bank Group announced that it had recorded a 30 per cent growth in its mortgage products targeting diaspora markets, mainly Kenyans living abroad.
KCB’s S&L Mortgages, currently the leading mortgage financier in the country, has said that five months after its launch, the Dollar Mortgage product or Foreign Exchange loan, had now captured the market, driven mainly by favourable terms.
According to Mr Joram Kiarie, the director in charge of mortgage business at the bank group, this trend was in keeping with the growing interest by Kenyans abroad seeking to own property back home.
Before the amalgamation in 2010 of S&L Mortgages with the larger KCB Group, the firm was not allowed by law to offer foreign exchange mortgage loans.
“A key advantage is that a dollar denominated loan attracts rates as low as seven per cent compared to local currency,” Mr Kiarie said, adding that www.kcbpropertyguide.co.ke, the web portal that was launched in March this year, had also seen an increase in both local and international visitors, averaging up to 610,000 hits a month.
The developments come as the mortgage division of KCB realigns its strategy in efforts to grow market share while widening its customer base.
The bank this year launched mortgage services in Uganda and Rwanda and has set eyes on the new republic of South Sudan.
“We are delighted at the opportunities that virgin markets such as Rwanda and South Sudan offer. We shall tap into these as we continue playing our supportive role in providing financing to developers looking to venture into these markets”, said Mr Kiarie.
KCB recently received a Sh9.6 billion loan from the International Finance Corporation (IFC), part of which will go towards mortgage lending with a focus on the bank’s subsidiary mortgage businesses in Tanzania, Rwanda, and Uganda.
“The Sh9.6 billion loan we got from IFC is to support regional business growth. We are focusing on financing small and medium enterprise (SMEs) and long-term mortgages. We are already inviting developers to come forward and utilise the finances for developing housing projects. We don’t want the funds to lie idle,” Mr Kiarie said recently.
Mr Kiarie revealed the news of the performance of the diaspora mortgage market as he flagged off four buses carrying 250 prospective home buyers who had turned up for the KCB S&L Mortgages property bus tour on August 27.
During the tour, some of the prospective home owners visited newly-completed housing projects as well as those still under construction in emerging hot spots like Athi River, Kiserian, Kitengela, and Rongai. Property prices in those areas are between Sh4.7 million and Sh6.5 million.
Others went to Nairobi’s up-market neighbourhoods of Lavington, Kilimani, Kileleshwa, Runda/Kiambu Rd, Westlands, and Parklands where prices range from Sh12 million to Sh20 million for two-, three-, and four-bedroom units.
Another group toured Embakasi, South B, South C, and Stoney Athi, where homes are priced at between Sh3.5 million and Sh9 million.
While yet another group toured Kabete, Ruaka, Kiambu Road, Ruiru, and Thika, where prices of two- to four-bedroom houses are between Sh5.5 million and Sh7 million.
All the projects belong to members of the S&L Developers Club.
The KCB S&L Mortgages bus tour has become an integral part of the business in Kenya, linking developers with their target market.
Buyers get to view and compare quality and prices of homes within their budgets.
This was the sixth KCB S&L property bus tour and the second this year following the success of another one in May that saw about 200 prospective home owners participate.
Mr Kiarie said that KCB would be looking for over Sh105 million in new mortgages out of the August bus tour.