Client interview: Cytonn Investments

Cytonn Investments’ vision is to become Africa’s leading investment manager, with a strategy that includes delivering on largescale projects that will create jobs, good neighbourhoods and in the process improve the standards of living, such as RiverRun Estates. Elizabeth Nkukuu, CIO and Head of Real Estate for developer Cytonn Investments, tells us about the RiverRun Estates and its challenges.

Tell us about RiverRun Estates

It is a master-planned development on a 100-acre parcel of land, which was formerly a coffee farm on the Ruiru slopes, close to Nairobi, Kenya. The development will be mainly residential units complemented by social amenities such as a commercial centre, a school and an ultra-modern hotel.

Why the masterplan?

The aim is to provide great homes and neighbourhoods for end users and also provide great returns for our investors.

What is happening in the Kenyan real estate market generally?

The returns have been impressive over the last ten years and last year, 2016, real estate delivered returns of 25.8 percent per annum on average across all sectors, with retail and offices performing best. We expect this good performance to continue, driven by the high demand for housing as Kenya remains the regional hub for most international business. The huge housing deficit in the country – estimated at two million units – and the continued investments in infrastructure in the country are also contributing factors.

What do you expect the biggest challenges to be?

For the real estate as a whole, the biggest challenge is the fact that they are capital intensive. Due to the high interest rates, the uptake of mortgages has remained low. To go around these challenges, we are engaging capital providers in advance and also have innovative payment plans.

What are the main risks?

The project comes to life in an election year that may affect timelines for approvals. This may also affect uptake as buyers may be hesitant, waiting to see the outcomes of the elections and the effect this will have on the market.

When will the scheme begin?

Having completed all the design works, we shall be in the market in June 2017 and break ground within the fourth quarter of 2017.

We are providing cost and commercial management services on Cytonn’s masterplan development.