Kenya has bought a building hosting its High Commission in London for £16,250,000 (Sh2.8 billion) as Nairobi shifts to property ownership for its diplomatic missions abroad to cut rental costs.
A report tabled in Parliament shows that Kenya has already paid for the property located at 45 Portland Place and is awaiting registration and transfer of the title of the property. The building has been purchased under a 999-year lease.
The purchase of the premises will save Kenya Sh103million in annual rent, disclosures showed.
‘The Government of Kenya has now successfully secured a long-term lease interest in the property through acquisition of a 999-year lease at a total cost of approximately £16,250,000 (Sh2.84 billion). The mission is waiting for the title documents from the HRM registry,’ the National Assembly committee on Defence and Foreign Relations says in the report.
‘The full purchase price has been paid, and the conveyance process, including transfer and registration of title, is ongoing’
The purchase of the building marks a shift where Kenya is now purchasing properties for the offices and residences of its diplomatic missions in efforts to reduce the rental costs that are estimated at above Sh3 billion annually.
Rising rent prices and renovation costs are a major headache for Kenya, a matter worsened by budget cuts for these foreign missions.
Kenya launched a phased programme to purchase property for its diplomatic missions in September 2021, with the acquisitions set to be staggered over 15 years.
Besides London, Kenya also bought property for the mission in New York and is also set to complete a similar deal for the also keen to buy property for its envoy in Geneva, Switzerland.
Geneva, New York and London attract some of the steepest rents in the world, underscoring why buying properties in these cities will be instrumental in cutting the rent costs that Kenya incurs every year.
The mission in London had operated from the property on a 67-year lease that expired in October 2021. Kenya then re-negotiated to continue using the residence by paying £350,000 (Sh60.87 million) in rent with an agreement to buy the property.
The market rent of the property was £568,250 (Sh98.4 million) but Kenya secured a lower rate of £350,000 (Sh60.87 million) on the promise to purchase it permanently.
Efforts to purchase a permanent chancery in London started in October 2021, but the first attempt failed after the tender was declared unresponsive.
A second attempt was made the following year but would be cancelled in May 2023 due to procedural concerns tied to the political transition after the 2022 General Elections.
‘Owning the Chancery in London supports prudent financial management by eliminating exposure to escalating rental costs in a high-value property, thereby delivering long-term cost efficiency and value for money,’ the committee says in the report.
Besides the London Chancery along 45 Portland Place, Kenya also owns a property along 78 Winnington Road and another along 48 Connaught Drive, both in London and which are owned on a freehold basis.
The property along 78 Winnington Road is the official residence of the High Commissioner to the UK, while the one along 48 Connaught Drive is the official residence of the Deputy Chief of Mission.
Besides buying properties, plans to facelift of its diplomatic missions in six African countries under a public-private partnership (PPP) arrangement as part of a policy shift aimed at easing reliance on Exchequer funding.
As part of the policy shift, Kenya targets a new arrangement whereby private investors will build, rehabilitate, and maintain diplomatic properties in Cairo, Lusaka, Harare, Bujumbura, Juba, and Kinshasa under the PPP model.
The works will entail the construction of purpose-built chanceries, consular halls, ambassadorial residences, and staff housing units.
Investors will design and finance the construction of the properties, then maintain them over a concession period to recoup their money before handing them back to the government of Kenya.