CIC Insurance Group has today made a public announcement on its plan to acquire property for development purposes. The property is to be acquired by CIC General Insurance Limited and CIC Life Assurance Limited, both wholly owned subsidiaries of CIC Insurance Group in Isinya, Kajiado. Total acreage of these properties is 417 acres valued at approximately KES 723 million, each acre selling for an estimated KES 1.7 million.

The investment plans were mentioned in the chairman’s statement last year when the insurance group listed by way of introduction on the Nairobi Securities Exchange on 19 July. Reference was made to it as part of the company’s diversification of investments into the real estate sector. Going by the HASS consult Q3 report, investment in the real estate sector is yielding good returns. The price of stand-alone houses rose by 3.4% and those of apartments by 3.6%. Asking rents rose sharply by 4.2% for the same period. All are/were signs that the real estate sector is where investors’ money should be. With a rising population and increasing demand for housing, the market seems ripe.

This however, does not come without risks. Defaulting risk and credit risk are often associated with the real estate sector. They are both major obstacles to investment since they reveal the inability of a borrower to pay back. This can be either the party investing in the market (CIC Insurance Group Limited) or the individuals renting and purchasing the houses. The greater the investment, the greater the risk.

The notice issued by the company dated January 10, 2013 states that shareholders of CIC Insurance Group Limited and the public are advised to exercise caution when dealing in the company’s shares.