UK Climate Investments (UKCI) and FSD Africa Investments (FSDAi) confirmed a £35 million (Ksh 5.2 billion) funding commitment to a Kenyan green affordable housing venture, which has received 100% of its targeted £61 million (Ksh 9 billion) investor backing for first close, enabling this locally managed fund to become operational as early as July 2021.

The Fund is targeting the delivery of approximately 10,000 homes using modern green technologies. The housing units will provide affordable ownership and rental opportunities with 100% ownership at an average cost of £30,500 (Ksh 4.5 million) and rentals ranging from £100 (Ksh 15,000) to £350 (Ksh 50,000) per month. The investments from UKCI and FSDAi deepen and strengthen the UK Government's commitment to supporting post Covid-19 recovery in Kenya.

Despite booming demand for affordable housing in Kenya only 50,000 new homes are built each year compared to a target of 250,000 housing units. This has resulted in unaffordable housing prices and continued growth of the city's informal settlements. Today, nearly half of Nairobi's population live in slums where construction standards are poor and unsustainable, and access to essential services is limited.

Nearly 40% of the population in Kenya live below the international poverty line and access to affordable housing continues to be a significant issue, especially in urban areas. This development of green affordable housing will focus on increased availability to the low to middle income population [whose family income is below $1500 a month].

UKCI and FSDAi's investment mainly targets Kenya's capital, Nairobi, and will contribute to the country's goal of building 500,000 new affordable homes by 2022. High levels of population and economic growth in Kenya have come with increasing levels of urbanisation over the last decades, creating an urgent need and opportunity to develop housing solutions that are both affordable and sustainable. Efforts to develop low-carbon buildings in Kenya also opens a new opportunity in the country's rapidly progressing energy transition. Kenya is already a leading clean energy market in the region, with renewables accounting for 60% of power generation as of 2019.

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Through delivery of this project, UKCI will help to embed international green standards in the Kenyan housing market. The investment will also support the development of sustainable building as a new green asset class for local investors, readying Kenyan institutional capital to further invest in the sector. The FSDAi investment will specifically support the build out of Open Access, a housing market intelligence portal led by the Centre for Affordable Housing Finance in Africa (CAHF) with support from FSD Kenya and Reall. This is designed to provide housing finance investors with the data they need to make investment decisions. Open Access will collect the data from these investments using it to create market intelligence for housing finance investors, developers and policymakers. Open Access will also use this intelligence to identify and resolve supply chain blockages and reduce barriers to entry for smaller scale players.

UKCI and FSDAi's investments in the locally managed fund* will demonstrate that affordable housing, particularly rental housing requiring long-term management, is a viable asset class for private real estate developers and investors. The investments will stimulate the flow of much needed long-term and domestic investment into this key area of development, while creating jobs in the construction and property sectors, generating profits for African businesses.

"It's excellent to see this initiative reach this important milestone. The investment we have made represents an inspiring opportunity to model how sustainable building designs can help fight the effects of climate change. The need for affordable housing in Kenya is greater than ever with urban populations increasing by more than 4% in the last five years. Our investment is meeting this need and will benefit thousands of Kenyans currently without affordable housing."

Richard Abel
Managing Director, UKCI

"We are pleased to be supporting access to affordable urban housing, which is a key pillar of Kenya's development agenda. We are confident that our investment in the fund and our support for the Open Access platform will address some of the critical factors that prevent financial markets from playing a bigger role in affordable housing in Kenya."

Anne-Marie Chidzero
Chief Investment Officer, FSD Africa Investments

"Access to affordable housing is an issue at the heart of many Kenyans. This is why, as part of the Kenya-UK partnership on climate change, we are proud to support the creation of 10,000 new green homes that not only will help us close the housing gap but will also provide new green jobs that will last. I am delighted that this British initiative has successfully attracted new investment and I hope it will lay groundwork for further investment in the sector, especially in the run up to COP26."

Jane Marriott
UK High Commissioner to Kenya

"A lack of consistent and reliable data to scope and evaluate the affordable housing market critically challenges delivery at scale. Housing delivery and its financing takes place along a value chain, which is encumbered with multiple blockages and market failures. Our Open Access initiative will work with investors and developers to collect data which will then be packaged as reliable intelligence on the housing market, to guide the stakeholders towards best actions for sealing the existing housing gaps."

Kecia Rust
Executive Director, CAHF