Former president Mwai Kibaki has sold one of the jewels of his vast business empire in a multi-million-shilling deal that affirms the position of real estate as one of Kenya’s most lucrative sectors.
Mr Kibaki has sold Union Towers, the 14-floor building in central Nairobi, to Mt Kenya University (MKU) for Sh800 million, making it one of the priciest real estate transactions this year.
MKU founder and chairman Simon Gicharu said the closing of the deal brings to an end a three-year bidding process and paves the way for the establishment of the institution’s Virtual Learning Centre.
“We have been pursuing avenues to strengthen our virtual learning programmes and will be using the premises to coordinate it,” said Mr Gicharu, adding that the transaction was closed for Sh800 million and financed through long-term debt from a local lender.
Until the takeover, Union Towers belonged to Parkway Investment Limited, a company Mr Kibaki co-owned with former minister Njoroge Mungai.
Mr Gicharu said the university had found the building’s location in Nairobi’s CBD attractive and suitable for its planned expansion to the city.
The Competition Authority of Kenya (CAK) has authorised the transfer of the building to the new owners, allowing the university to roll out its expansion plan.
Thika-based MKU is not new to Union Towers having occupied a number of floors in the building on long term leasing terms.
The building has in recent years become a key learning hub in the CBD that also houses Nyeri-based Dedan Kimathi University’s city campus.
It also houses private businesses such as fast food chain Gallitos.
MKU’s pursuit of a virtual learning platform makes it the second institution after Kenyatta University to do so and it remains to be seen how the programmes will impact access to and quality of university education in Kenya.
MKU’s acquisition of Union Towers comes two months after it made a Sh300 million bid to acquire Inoorero Tower in Nairobi’s Parklands area.
Politician Francis Nyammo who owns the building put it out for sale after a local bank placed notices in the local press seeking to auction it to recover money it lent its owners but had not been paid.
People familiar with the deal said Mr Nyammo had found a different buyer who has agreed to buy the building at a price of Sh380 million and has made a 10 per cent downpayment.
MKU, a private university, operates 12 campuses in Nairobi, Thika, Mombasa, Meru, Nakuru, Mumias, Eldoret, Kitale, Lodwar, Kakamega and Kabarnet. It also has a campus in Kigali, Rwanda and a marketing office in Juba, South Sudan.
The successful purchase of Union Towers should help MKU grow its presence within Nairobi’s CBD where universities are locked in a fierce battle for working students.
Universities have in the past eight years spent billions of shillings in the purchase or leasing of buildings in Nairobi and other major towns where they have set up campuses targeting students who attend classes after work.
Both public and private universities are estimated to have spent more than Sh5 billion in buying buildings and parking areas in downtown Nairobi alone in the past five years.
At least nine institutions — including the University of Nairobi, Kenya Methodist University, Jomo Kenyatta University of Agriculture and Technology, Kenyatta University, Moi University and the Presbyterian University of East Africa — have campuses in central Nairobi.
Economic Survey 2014 indicates that Kenya’s university student enrolment grew by 34.9 per cent to 324,560 last year from 240,551 the previous year.