By Dennis Ayemba
Cytonn Investments is an independent investments management company, focused on alternative investments, namely real estate, private equity and structured products. The firm invests capital seeking attractive opportunities in Kenya and the region.
The main types of clients that they serve include global institutional investors such as Taaleri of Finland, who have been invested in Cytonn’s development projects since inception, having committed over Ksh 2 billion to the firm’s development projects, local institutions like pension schemes and SACCOs, individual high net-worth investors and the retail segment through the Cytonn Investment Co-operative.
“Over the last few years, Cytonn has grown to over 150 permanent members of staff. Our portfolio has also grown to over Ksh 74 billion of projects currently under mandate, with over 14 investment ready projects. We have strong partnerships with financiers and land-owners in form of joint ventures, which then enable us to secure funding & land for real estate developments,” said Shiv Arora, Cytonn’s Head of Private Equity.
Cytonn has a unique strategy to couple demand and supply in the real estate market. “There are a number of global institutions and investors seeking the attractive opportunities in real estate but they do not have the development capability in terms of time or capital. On the other hand, there are a number of attractive development opportunities with no access to capital. Cytonn brings together the people with the capital and land owners through joint ventures, and through Cytonn Real Estate, develops world class property investments,” added Shiv.
“Our real estate team, with over 100 years of combined experience in real estate and investments, provides end-to-end real estate development solutions.
The team comprises of a research team keen on identifying the best areas to invest, a concept design team that work to deliver superior quality products, a project management team that ensure delivery of a project within the stipulated time, costs and scope and a fund-raising team that enables access to funding for our projects,” he explained. “This is complimented by a strong financial advisory team that, in addition to coming up with tailor made investments solutions for our clients, sells the end product to the users.”
“To ensure continuous focus by all employees, every member of staff is a shareholder of the firm, and thus we endeavor to ensure the firm does well because when the firm does well, we also do well,” Shiv added.
The Head of Private Equity insists that research is key to not only establish the potential returns from an investment but also to determine who the target market is. A real estate investor will then come up with products that suit their clients’ needs. This then is a win-win situation; the buyer gets value for their money, while the investors get uptake for their product and consequently, returns for their investment.
“Developers are now coming up with creative ways of making housing more affordable. These include discounted off plan sales, tenant-purchasing methods, and partnership with mortgage providers.
They are also more enlightened about alternative building technologies that reduce construction time. While some of these means are expensive, they significantly reduce the construction period and the cost of labor, compared to the use of brick and mortar. Moreover, scrapping of NEMA and NCA levies, as well as issuance of tax incentives for mass development, are some of the efforts put in place by the government to boost real estate development,” voiced Shiv.
With reference to the challenges facing the industry, Shiv pointed out that financing is the main challenge facing real estate development.
To secure funding, developers have to incur high-interest costs which are then transferred to the end-user. With the interest rate capping, banks have now tightened their lending guidelines preferring to lend to low-risk entities.
Another challenge facing real estate is the high land costs especially in Nairobi. On the other hand, developing in the outskirts of Nairobi is equally expensive as the developer has to provide infrastructure to boost uptake for their product.
“Cytonn has set itself apart as a trusted investment partner. For landowners, we seek to provide value for their land with returns above 20% per annum.
For our investors, we not only deliver high returns, but also ensure we are responsive to their needs through our client-focused approach. For real estate buyers, we provide superior quality products that deliver attractive returns and lifestyle living,” affirmed Shiv.