Kenya Railway Corporation (KRC) announces plans to develop student accommodation. In a bid to diversify revenue, KRC has announced plans to tap into the student accommodation sector.
KRC revealed that the project envisions the development of accommodation of a minimum of 2,500 students to bridge the gap between demand for quality accommodation and the increasing enrolment of students in universities
Currently, there is a huge deficit in student accommodation. As of 2021 Acorn reported that the available student accommodation capacity was at 280,000 against the 600,000 demand.
Year-on-year enrolment in higher education has increased, in the 2022/2023 financial year, the student enrolment increased to 562,925 from 562,066 in 2022/2021.
Additionally, in 2021 Acorn reported that the student accommodation capacity stood at
280,000 beds against the demand of 600,000 beds at the time.
KRA will issue the developer a 45-year lease after which the developer will hand back the
project to the Kenya Railway corporation. During the lease period, the developer will have the mandate to construct, commission, operate, and manage the student housing units.
Throughout the lease term, the developer will compensate KRC through a hybrid payment structure, commencing with the initial stand premium upon of before lease signing, in addition to KRC’s annual rent and portion of the development revenue.
The contract and lease will entail the governance structure which shall incorporate oversight, decision-making, and reporting obligations throughout the project life.
During the lease period, the developer will be permitted to levy fees on the site project site, and any funds generated from the land charges will be deposited in an escrow account which Kenya Railways will be a signatory.
The move by Kenya Railways will be a big boost towards solving the problem of student accommodation shortage, and will also be a good diversification strategy noting the huge financial loss of Kshs24.0 billion reported in the financial year 2020/2021.
