A4ARCHITECT MOTEL AT THOGOTO SOUTHERN BYPASS JUNCTION BUSINESS PLAN
Project: Motel along Southern Bypass at Thogoto junction.
Client: A4ARCHITECT REAL ESTATE INVESTMENTS FORUM
Location: Thogoto town, along Southern Bypass.
Number of Motel rooms. 30
Sale price per Motel room. KES 1,193,916.67
Return on Investment. 5.5 years.
Monthly income expected per share.KES 18,000
JANUARY 11TH 2014
EXECUTIVE SUMMARY
This is a project proposal for the construction of a middle class Motel comprising of 30 No. rooms on a parcel of land situated at Thogoto.
The project has been conceived, designed and will be implemented by www.a4architect.com for Ms a4architect investments ltd.
The estimated development cost for the project is KES 35,817,500.00
The project completion period shall take 12 months from ground breaking to hand over.
Sales for 30 Units @ KES 1,193,916.67 will be in the range of KES 35,817,500.00
Return on Investment shall be in the range of 5.5 years .with Property value appreciation is estimated to be at 50% per annum, meaning the value doubles after every 2 years, due to proximity to the busy Southern Bypass highway , Karen and Thogoto town.
WWW.A4ARCHITECT.COM
A4architect is a dynamic property consulting company specializing in providing a one-stop service for the management and development of a variety of property development projects. It provides its clients, who may be property owners, developers or tenants, with the expertise to guide a project through the complex development process from concept through to building completion.
Depending on the requirements of their client, A4architect can provide a full or partial consulting service. The company’s involvement can vary from sourcing suitable sites, arranging local authority approvals, managing the professional team or providing a complete project management service.
The principals behind the firm have several years experience in designing and managing to completion several projects of various natures .
THE PROJECT
The project comprises the construction of 30 No. Motel rooms each self contained, and a restaurant for Sale at Thogoto Southern Bypass junction on a subdivision measuring just about 0.17 acres.
The overall theme of the development would be one of maximizing on the plot use whilst maintaining reasonable individual privacy within a ‘Green Sustainability’ architecture.
PHASED CONSTRUCTION
In order to ease the impact of the overall cost of the development it is proposed to carry out the construction in phases to be jointly agreed on with the clients.
The 0.17acre plot will have 60 units in total.
The construction will be phased in 4 phases comprising of 15 No. units respectively.
Each of the phases shall be planned to deliver units that are complete and ready for occupation. This will facilitate pre-selling of some of the units prior to the end of construction. This would be achieved through pro-active networking with property managers and use of the internet and social media in particular.
The foregoing will result in further cushioning of the effect of the high cost of financing in Kenya.
In order to enable planning of major infrastructural requirements such as water storage and foul water disposal right from the outset, a master plan of the entire development shall be evolved. Thus the capacity of some of the facilities may initially exceed the needs of the accommodation provided, but this would be done with the full knowledge that the development will grow to fully utilize the facilities provided.
Auxiliary features include:
• Paved walkways .
• 10 car parkings.
• Extra rain-water storage .
• Planted landscaped 24-hr. irrigated gardens.
• Solar power electrical wiring
The country ambience would further be enhanced by having strategically planted palm trees which would serve the added role of acting as wind breaks.
DEVELOPMENT BUDGET
The development budget is as follows:
30 No. motel rooms each measuring 5m by 3.6m.
• The development budget includes professional fees
1.00 Building details
1.10 Type of rooms: 5m by 3.6m self contained room.
1.11 Number of rooms :30
1.12 Number of rooms in each floor :15
1.13 Restaurant
1.14 Office
1.15 Building Cost including External Works and Land: KES 35,817,500.00
2.00 Construction cost breakdown
Total Building works[including Infrastructure& Electric Fencing]-
KES 31,317,500.00
3.Land Cost- [0.17 acres] KES 4,500,000.00
OVERALL PROJECT COST INCLUDING LAND= 35,817,500.00
SALES PROJECTIONS
1.11 Projected sale price per hotel room unit 1,193,916.67
1.12 Overall sales revenue=35,817,500.00
1.14 Gross Return on Investment at Worst case Scenario. 5.5 years
LOCATION
Thogoto Southern Bypass junction is situated 15 minutes drive[25 km] from Nairobi’s Central Business District along Southern Bypass. The site is served by the Southern Bypass, which is an International road linking Mombasa to Rwanda and Uganda. The site of the proposed construction is fronting the Southern Bypass near the cross roads at Thogoto town. See google map below
http://goo.gl/maps/slpIR
The area is connected to the mains water supply from the Kiambu Municipal Council and also has easily connected electricity supply from KPLC.
The immediate locality consists of subdivisions each measuring an eighth of an acre. Developments in this area are predominantly single family residences. The occupancy is predominantly homeowners. With the new construction of the bypass, developments around this area are rapidly transforming into high rise commercial nature.
The majority of the buildings here are of reasonably well constructed and maintained.
MARKET DESCRIPTION
Given the proximity of the site to Nairobi’s CBD, Southern Bypass , Thogoto town, Kikuyu town, Karen, Dagoretti market, the site would realize good returns on a multi level hotel development.
Property appreciation is expected to be in the range of 50%, with value doubling every 2 years.
The planned development intends to maximize this potential by creating accommodation that is spacious whilst at the same time making optimum use of the vertical space available.
At the moment, the closest hotels nearby are located at Kikuyu town,5 km away.
Wida highway motel, located 8km away at Sigona, charges kes 7,000 per night.
We have worked out a 5.5 year Return on Investment based on 60% occupancy at charges of kes 1,000 per night.
This means that the project has potential to increase charges per night from kes 1,000 to kes 7,000, thereby giving Return on Investment within 7 months.
The planned development would meet an existing need since the site is located along the soon to be completed busy highway from Mombasa, Tanzania, Zambia and Southern Africa to Uganda, Rwanda and Central Africa.
COMPETITION
In the locality of the planned development, there exist several properties which are either owned by the residents or are rental properties. The closest competition perhaps comes from the Tamarind Estates which are currently selling at KES 7.5 million per unit. These are however not competitive in terms of pricing since they are priced KES 3.5 Million higher than the Greenville Units.
The other competition is the Great Wall apartments at Mlolongo selling at KES 3.0m which fortunately is 100% sold out and the 360 Apartments[a few meters away] selling at KES 3.5m.
SALES PROJECTIONS
It is planned that marketing the development for sale shall commence before the construction begins.
Consequently it is anticipated that by the time the first floor is completed there shall be an inflow of funds that can either be utilized to start construction of the next phase/second floor.
The sale price for each unit has been set at KES 1,193,916.67 .
This sale price enables potential investors to reap into the high property appreciation rates seen around Nairobi, with potential for doubling the worth every 2 years.
This sale price also enables potential investors to reap into the high Retrun on Investment, set at worst case scenario of 5.5 years with charges of kes 1,000 per night and best case scenario of 7 months with charges at kes 7,000 per night, both at 60% occupancy rate per year.
If the occupancy rate increases, returns will also increase pro rata.
Currently, options available for investors in Kenya with KES 1,193,916.67 are limited to buying land, 1/8th acre , in areas far from Nairobi CBD such as Kajiado, Isinya, Kamulu whereby the lands will not offer monthly sources of income and can only be resold after many years for them to offer considerable returns to the investors.
With the proposed investment in a Motel along Southern Bypass, the KES 1,193,916.67 gives you monthly income and doubles its value every 2 years hence a better investment.
Exit Plan.
In the event the Motel room model does not work out as initially planned, the rooms can be converted into monthly rentable single rooms and the restaurant rented out at market rates.
EXECUTION OF THE PROJECT
A4architect will in this provide the clients with a full design/build service. This shall include
1. Design and specification
Architectural, structural, mechanical and electrical drawings shall be prepared and necessary approvals sought.
During the various stages of the design, the client shall be kept fully informed and client approval sought prior to proceeding to the next stage. The engineering design shall be done by registered engineers under the guidance of A4architect. Detailed specifications shall be developed with close consultation with the client.
2. Project estimates
Subsequent to completion of the design, a Quantity Surveying firm under the guidance of A4architect shall undertake construction cost estimates for the project.
3. Preparation of tender and contract documents
After final design has been done and client approval obtained, tender documents shall be drawn up for the general and specialist contractors. The specialist contract documents shall be prepared with guidance from the relevant engineers.
4. Tendering
Selected contractors shall be invited to tender for the various work packages. We shall then analyze the tenders returned and forward our recommendation to the client.
5. Contract documentation
With the contractors have been selected, we shall draw up the required contract documents and enter into contract with the contractors on the client’s behalf.
6. Project management
Subsequent to the contracts being signed and mobilization to the site, we shall provide superintendence and project management. This will entail ensuring that the project is brought in on time and under budget by constant monitoring of operations on site and remedying any issues that may prevent timely completion or cause expenditure to exceed the budget.
7. Contract administration
We shall handle all matters relating to the various contracts including but not limited to stage payments, performance bonds, extensions of time and relationships between the various trades involved in the project’s execution.
8. Sales and marketing
In conjunction with an estate agency approved by the client, we have produced a presentation package to be used in the marketing of the Motel.
PROJECT TIMELINES
a) Design to Tender
The design to tender process will take a total of 1 month. This will include commissioning of all engineering design, preparation of bills of quantities and obtaining of all relevant approvals for the development.
b) Construction
Construction of the entire project is estimated to take a maximum of 12 months.
MARKETING AND SALES
Marketing of the properties has been planned to start even before ground is broken for the start of the construction. This serves the dual purpose of creating awareness of the availability of quality property for sale and to confirm the validity of the market intelligence.
Already several inquiries have been received from potential buyers .
The internet, mainly Google ads, will be the main marketing tool.
Real estate agencies will be supplied with a virtual presentation kit that includes a walk through movie of the development. A prospectus of the development will also be made for distribution to potential purchasers.
Prepared By
Francis Gichuhi Kamau B.Arch. U.o.N M.A.A.K[A] Registered Architect
www.a4architect.com
+254 721 410684
A4architect.
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