Pan Africa Insurance has announced plans to build a 20-storey office complex in Westlands, Nairobi, as it seeks to supplement income from its core business.
The Sh2.5 billion project, whose construction begins later this year, will be funded using Pan Africa’s cash reserves, said the firm’s CEO Tom Gitogo.
“We will use a third of the space and rent out the rest,” Mr Gitogo added.
The proposed office block that is tipped to be one of the tallest buildings along Waiyaki Way will see Pan Africa relocating from its Kenyatta Avenue headquarters and earn rental income from corporate tenants.
Westlands offers some of Kenya’s highest commercial rents, with office space going for between Sh100 and Sh120 per square foot – nearly double the cost of similar spaces in the Nairobi central business district.
Pan Africa, which owns Mae Ridge homes in Nairobi’s Runda estate, said it earned high returns from sale of property in the leafy suburb, which boosted its revenue for the year ended December 2013.
Insurance firms have lately ventured into real estate development, building high-end commercial properties, as they seek to cash in on high rental fees and capital appreciation.
Britam is, for instance, building a 31-storey office complex along Hospital Road in Upper Hill – Nairobi’s fastest growing commercial district.
The building, to be known as Britam Tower, will have 30,000 square metres of space for rent and will house the firm’s headquarters and accommodate corporate tenants. It is scheduled for completion in December 2015.
UAP Insurance is also building a 32-storey tower in Upper Hill that will serve as UAP headquarters, with surplus space for letting out to corporate tenants. The UAP Tower is estimated to cost Sh4 billion.
The regional insurer is also constructing a 15-floor office block in Juba, South Sudan. Dubbed Equatorial Towers, the upcoming building is tipped to be the tallest man-made structure in South Sudan on completion in August.
The Kenya Reinsurance Company has also announced plans to build a high-rise commercial building in Upper Hill at a provisional budget of Sh4 billion to cash in on the rising demand for office space in the area.