Nairobi US Embassy estate developers to record top dollar returns – Business Daily

Rosslyn Springs homes during a past sale in Nairobi. Private developers are constructing US Embassy staff houses at the estate. PHOTO | DIANA NGILA | NMG
Property developers Gateway Real Estate Africa Ltd (GREA) and US-based Verdant Ventures will enjoy an annual rental yield of up to 9.7 percent in dollar terms from leasing houses to the US Embassy in Nairobi, well above the average for high-end estates in the city.
A real estate expert told the Business Daily that on average, high-end residential houses in the city earn developers a dollarised annual yield of between two and three percent, and in shilling terms between five and six percent.
The two developers will earn $4.724 million (Sh534 million) in the first year of the deal that will see the embassy take up 90 units for eight years in the housing estate dubbed OBO Kenya Diplomatic Housing, which is a gated community in Rosslyn.
The total project cost stands at $48.5 million (Sh5.5 billion), with the residents also set to enjoy added amenities.
“The development will consist of a combination of apartments and townhouses, and a clubhouse with gym, swimming pool and other amenities … (It will be) 100 percent leased to the United States of America for a term of eight years,” said Mauritius-based Grit Real Estate Income Group in a prospectus issued ahead of its acquisition of a majority stake in GREA.
Post the acquisition, Grit will own half of the project.
The handsome yield premium on the US embassy lease, the expert added, is due to this being a special development targeting a specific client, and the added amenities and services.
He noted that the fact that this is also a commissioned project by the US government handed to a trusted developer who has carried out similar projects in other countries is also a factor in the higher rental yield.
“GREA, through the APDM team, has been very successful at securing an accretive pipeline of development opportunities, most notably providing the United States Bureau of Overseas Buildings Operations (OBO) with embassy housing across Africa and developing data centres for leading IT services and solutions providers in select African countries,” said Grit.
GREA is undertaking a similar project for the US government in Mali’s capital Bamako, where the firm is putting up 45 housing units, and has already handed over a 112 unit estate to the US government in Addis Ababa, Ethiopia.


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