Companies
Kenya Railways eyes student accommodation in revenue diversification push
Wednesday December 06 2023
Kenya railways corporation managing director Philip Mainga on March 7, 2023. PHOTO | LUCY WANJIRU | NMG
Kenya Railways Corporation (KRC) plans a student hostel in Nairobi with a minimum of 2,500 beds in a strategy to widen its revenue streams.
The hostel would be built next to the Technical University of Kenya campus and the proposed Central Station complex.
“The project envisions the development of accommodation for a minimum of 2,500 students to bridge the gap between demand for quality and affordable student accommodation and the increasing enrolment of students in universities,” KRC said in a disclosure.
The State agency said the hostel project would be implemented under a finance, design, and commission model and would give a developer a lease of 45 years.
“The developer will be obligated to design, finance, construct, commission, operate, and manage the student housing units during the lease term, after which period, the project site shall revert to KRC. This lease tenure is informed by the Kenya Railways Land Management Policy,” it said.
“The relationship between KR and the bidder (developer) shall be governed in accordance with the terms of the contract and the lease. Further, the contract and the lease will comprise the project governance structure including oversight, decision-making, and reporting obligations during the project lifecycle”
During the lease, the developer will pay KRC under a hybrid compensation plan, starting with a stand premium before or at the signing of the lease, KRC’s annual rent, and a share of development revenue.
Upon the expiry of the lease term, the properties under the project will revert automatically and fully to KRC.
The developer will be allowed to charge the project site on condition that all funds raised by charging the land shall be deposited into an escrow account where Kenya Railways will be a signatory.
Demand for student accommodation in Kenya has shot up, helped by the growth of tertiary education.
Since 1987, the number of tertiary institutions has risen from four full-fledged universities to 68 in 2022 while the number of TVET institutions hit 2,401 with a student enrolment of 562,499.
→ (email protected)
