Real estate developer Home Afrika registered a 90 per cent increase in net losses in the year ended December 2018, the firm’s financial results for the period have revealed.
The 90 percent increase in losses translates to the firm posting a Ksh. 346.2 million net loss in the period under review compared to the Ksh. 181.7 million registered in a similar period in 2017. Revenue collected from the firm’s contracts with customers similarly dropped to Ksh. 109 down from Ksh. 262.7 million registered in 2017.
The firm attributed the significant increase in losses to low uptake of its real estate developments as a result of strained credit in the private sector that has been fueled by the interest rate cap law. The rate cap law has made lenders shy away from offering loans, which on most occasions fund real estate unit purchases, to persons considered likely to default on the credit advance.
“This is attributed to the impact of the slowed growth in the real estate sector amid constrained credit access and general slowdown in spending power among buyers which resulted to a decline in sales of plots and house buyers,” Home Afrika said in a statement.
The poor performance in the year ended December 2018 has seen the firm announce to its shareholders that it will not allocate any dividends for the period.
According to a news report by the Business Daily, the firm is currently looking for investors to inject fresh capital into the business in a bid to better its business.
“The process of fund raising has so far progresses very well. We are hopeful that this process will be successfully concluded shortly and the funding committed to by a strategic investor. The directors remain confident of the underlying medium to long term value of the group’s land bank and therefore profit generation capacity in the periods ahead,” Home Afrika is quoted as saying by the Business Daily.