Shelter Afrique has entered into an agreement with Integrated Property Investments for the first phase of a five-year Tsh659 billion ($627.6 million) housing project — Bahari Beach satellite town — in Dar es Salaam.

The two signed off a Tsh6.5 billion loan that will fund this first phase comprising 114 executive villas and town houses, said Shelter Afrique, a regional housing finance and development institution established by African governments and the African Development Bank.

The proposed Bahari Beach satellite town will have about 1,000 housing units, a five-star hotel, a ferry terminal, a school and a shopping mall among other facilities.

With a planned total built area of 500,000 square metres, the project is expected to eventually cost nearly Tsh659 billion ($627.6 million) over five years. The first phase is already under construction with partial completions set for October 2009 and May 2010.

The location of the project was chosen for its growth potential. It is around 25 kilometres away from the city centre and 30 kilometres from the historical Bagamoyo town on the coast.

The agreement was signed on January 22 at Shelter Afrique Kenya offices in Nairobi.

The ceremony was attended by Integrated Property Investments managing director Suleiman Dualeh, Minister Counsellor at Tanzania embassy in Nairobi Ms Verdiana Mashingia and Shelter Afrique acting managing director Mazi Ositadinma Okonkwo.

Integrated Property Investments said that the underlying philosophy of the project is to build a self-sustaining hub and reduce the need to travel to the city centre on routine basis.

According to the UK-based property investment firm, the project concept is the construction of self-contained mixed-use development with first class housing, recreational and commercial amenities in one place.

Integrated Property managing director Suleiman Dualeh said the way forward for African cities is to develop a number of satellite towns that will become alternative city centres as the most effective way to deal with peak hour traffic jams.

“We maintain that our solution is an inevitable option to spiraling dysfunctional cities across the fast urbanising Africa,” he said.

Mr Dualeh said African capital cities could follow the example of London which partially addressed its problem with the construction of Docklands as an alternative city centre.

According to Mr Dualeh, Integrated Property Investments will, upon completing the construction, ensure the area retains its quality by offering routine maintenance, garbage collection and security services to all private and commercial residents. These services would be offered through a separate company in which the residents would have a stake.

The firm envisions coming up with similar schemes in Kenya, Uganda and Zambia.

Mr Dualeh asked governments in the region to give investors tax concessions and other incentives to encourage construction of houses to ease the current shortage.

He said tax exemption would bring down the cost of putting up houses. Further, governments should provide low-priced land to developers.

“What makes houses expensive is the price of land,” Mr Dualeh said. “If governments provide land at concession rate it brings down house prices.”

Minister counsellor at Tanzania embassy in Nairobi Verdiana Mashingia urged Kenyans to invest in her country to benefit from reforms initiated by the government.

She said her government was in the process of formalising land and housing in unplanned areas. The aim of this programme is to officially recognise such property and finally create security of tenure.

Ms Mashingia said long court procedures in mortgage lending cases and red tape in the transfer of mortgage properties had been done away with.

As a result the bank and the borrower will enter into a contract and if the borrower breaches the contract, they will be given a notice of 60 days to pay, after which his property will be sold without involving the court.

Formerly the procedure for transfer of mortgaged property was long and cumbersome.