Month: February 2014
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Theo Jansen’s Strandbeests – Wallace & Gromit’s World of Invention Episode 1 Preview – BBC One
http://www.youtube.com/watch?v=azy-c6QXUCw
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Southern Sunshine Hotel, Nairobi.Questions and Answers.
1. What is the status of the Hotel project? i.e. is it in the planning, have you began construction, or is it in the completion state?
As of 24th February 2014, the land conveyancing transaction is halfway through, awaiting the next Land Board meeting scheduled for 6th of March 2014 at Kikuyu town for the extraction of the rremoval of the caution by the Ministry of roads then 21 days later,the final stage of conveyancing whereby the land will change 100% ownership to A4architect investments, LTD from the current owner.
The title deed will be posted at our forum here for people to see and make searches to verify this at the Kiambu Ministry of Lands offices.https://www.a4architect.com/discus/topic/joint-investment/page/6/
and the Southern Sunshine page here
https://www.a4architect.com/buy-a-hotel-room-along-the-southern-bypass/
2. When do you envisage it will begin operations?
Construction will begin from mid March 2014 and will phase 1 will comprise of the ground floor office,restaurant and bar plus the 1st floor 11 rooms. These should be complete by September to December 2014 whereby the 1st phase will be open for business as the 2nd floor phase 2 construction continues.
The Southern bypass is scheduled to be officialy complete by July 2015.http://www.vision2030.go.ke/index.php/pillars/project/macro_enablers/179
3. You had given discounting rate for the people who join earlier. If I join today what batch will I be in and how much will I pay? Have you attained the 33 members to had envisaged?
Here is a link to the sale price.
As at 24th February 2013, the membership stands at 3 people/rooms.
https://www.a4architect.com/2014/02/17/southern-sunrise-hotes-southern-bypass-nairobi-sale-price/
The sale price is KES 1, 740,000.
The sale price is discounted as below.
The 1st batch of 5 buyers are discounted at kes 540,000, to purchase at kes 1,200,000.
The 2nd batch of 5 buyers are discounted at kes 360,000, to purchase at kes 1,380,000.
The 3rd batch of 5 buyers are discounted at kes 180,000, to purchase at kes 1,560,000.
The 4th batch of 5 buyers will purchase at kes 1,740,000.
The 5th batch of 5 buyers will purchase at kes 1,920,000.
The 6th batch of 5 buyers will purchase at kes 2,100,000.
The final batch of buyers will purchase at kes 2,280,000.
4. When will be the first meeting of the 33 shareholders be?
We had the initial meeting at our offices along Karen road here
https://www.a4architect.com/contact-us/The meeting was in January 2014. We intend to have the next meeting at the site once construction begins. The meeting will be attended by the current shareholders and other members who will want to join in. We envisage getting the full 33 membership by January 2015. The project will continue with the membership resent as new members join in. Once the 33 membership is reached, we intend to move to a similar hotel project where current members or new members can come together and partake into a similar hotel project, in areas such as Nakuru, Lamu, Diani,Turkana,Nyahururu or where feasibility studies will show a strong demand for boutique hotel project.
5. Will you be a shareholder?
Yes. All the hotel projects will have myself as a shareholder due to the high return on investments percieved.
Similar hotel projects such as Ngong Bounty hotel are charging more than what we have worked out in the return on investment report above, meaning that once operations start, returns should be more than what we are currently planning on since the hotel is on an international bypass road.
http://www.ngongbountyhotels.com/contact-us.php
6. How strict is the “own a room” in it’s sense? Does one’s
share own an exact particular room say eg room no 3.A room owner owns the rooms in a similar manner that an apartment owner in the thousands of apartments for sale around Nairobi does. The only difference is that i this case, the room owner agrees to let out thir room to a hotel management organisations so as to get more / higher rental revenues.
A shareholder gets to own a particular room explicitly denoted by a number e.g 1 to 33. This particular room is described in detail in the contract where the owner has complete ownership of the room but has allowed the room to be used as a hotel and the revenue generated by the hotel to be relayed to him/her. The owner takes part in the decisions pertaining the running of the hotel. As a fall back resort of the last option,in the worst case scenario, the rooms can all return to their previous owners who can then decide on how best to use their individual rooms, either by living in them or letting them out as bedsitters. This however, has very minimal returns compared to letting the rooms out as a single hotel.
7. Does this translate also to how the share earns revenue?The hotel management will collect all rent from all rooms, remove running costs and equally distribute earnings to all room owners. This is exactly what happens in other similar hotels in South Africa.
http://www.fractionalownership.co.za/sectional-title-hotels-explained
8.Expounding on the question: If room no 3 was occupied 15 days in a
month will the owner get the income from 15 days and lets’s say room
no 4 was occupied for 24 days that month will the owner get income
from the 24 days? Or will the income be pooled together and income
paid as per the share ie equally.The income from all rooms will be pooled together then distributed evenly. All the 33 rooms are of the same size so the rates will all be the same.
9. What is the prices currently?
Current price as at 24th February 2014 is kes 1,200,000 per room. The price increases by 15% after every 5 buyers.
https://www.a4architect.com/2014/02/17/southern-sunrise-hotes-southern-bypass-nairobi-sale-price/
10. Mode of payment. Is the payment a 100% cash upfront or can one pay
in installments? For instance, if one can secure the full sum in May
can he book a share now at current price and complete payment in May?Payment is 100% cash/cheque upfront or 2 instalments to PRISM DESIGNS AFRICA.
11. When buying a room does it automatically translate to owning a
share in the owning company? Will there be other shareholders apart
from the 33 room owners? And in the case of 4 people co-owning a room
will they each have a share or will they have to own one share under a
common ownership? If Southern Sunrise is currently owned by a company
can one have access to the Memorandum and Articles of Association?Buying a room automatically translates to owning 1 share of the Limited Liability Company.
If the hotel rooms increase to a number higher than 33, by building more floors, there is a possibility of the shareholders increasing. The number of shareholders will be exactly the number of rooms.If 2 or more people come together to own a rooms, they will have to nomiate one of them to be the registered owner of the room. Our advocate,James Joroge,contacts as below, will advise on this further.
12. Is Southern Sunshine an off-plan project or is it a going concern?
The Southern Sunshine hotel is a going concern. Once the membership is achieved, it gets a life of its own and decisions are made as per Kenya Laws/A.G/Registrar of companies rules.
13. Viewing. Can one arrange for viewing of the hotel/plot and get a
copy of the land documents to carry out a search?Yes. You can visit the site any time. Here is the google map for the location. The land conveyancing transaction will be complete by 6th March 2014, whereby a search at the Liambu Lands Registry will show that A4architect investments LTD owns the land.
A further search at the AG’S office/Registrar of companies will be able to show who are the shareholders in the A4architect investments LTD.
Click here to view the location on Google maps.
[googlemaps https://maps.google.com/maps/ms?msa=0&msid=205617053586273466800.0004f20ad0cb21f337137&ie=UTF8&t=h&ll=-1.269013,36.66024&spn=0,0&output=embed&w=425&h=350]
Francis Gichuhi Kamau, Architect.
info@a4architect.com -
Comparison on Return on Investment at Southern Sunshine hotel vs other projects vs stock exchange
The Southern Sunshine Hotel is located along the Southern Bypass in Nairobi, near Thogoto town.
The rooms are being sold at kes 1,740,000 with discount for early buyers as below
https://www.a4architect.com/2014/02/17/southern-sunrise-hotes-southern-bypass-nairobi-sale-price/Assuming 70% occupancy rate and kes 1,400 as room charges per night, this will generate a monthly revenue of kes 1,400 x 30 days x 70%=kes 29,400 per month.
This will be kes 29,400 x 12=kes 352,800 per year.
For a cost of kes 1,740,000, the investment will give you a return of kes 352,800 per year. This occupancy rate has the possibility of increasing to 100%, as in the case of hotels currently in the nearby Kikuyu town which have 100% occupancy daily.
This cost per night of kes 1,400 also has the possibility of increasing to kes 5,600 as in the case of the nearby Wida Highway motel.
This represents a return on investment of kes 352,800 devide by kes 1,740,000 x 100%=20.2%.
This return on investment is only for the rental income.
Running costs.
Expected monthly running costs are as below
electricity 30,000.00
water 15,000.00
casual labour 20,000.00
cashier 20,000.00
manager 50,000.00
toileteries 40,000.00
insurance 5,000.00
security 15,000.00
TOTAL KES 195,000.The rent accrued from the bar and restaurant at kes 80 per sq. ft works out to kes 79,200.
This amount goes to offset the monthly running cost to kes 115,800 .This amount is divided by 33 rooms to kes 3,500 per month. This amounts to kes 29,400 minus kes 3,500=kes 25,900 per month net earnings.
This works out the net Return on Investment to 18%.Capital Gains.
The investment is also gaining and appreciating over the years. Property in Kenya generally has a 10 to 20% annual price increase.
Assuming an annual price appreciation of 20% since the land is next to a busy international highway and available land for sale is scarce since most land is owned by Kenya Forest Service/Ngong Forest, PCEA Thogoto teachers college, and Alliance High school, the scarcity of land for sale along the highway will push prices up very fast.
The kes 1,740,000 sale price will appreciate by 20% annually to kes 2,088,000.
This represents a kes 348,000 capital gain per year.Total return on investment.
The total return on investment of accrued rent plus capital gain will be kes 352,800 from rent plus kes 348,000 from the property appreciation.
This totals to kes 700,800 per year.
In short, a purchaser of a room within the Southern Sunshine hotel will increase in wealth at a rate of kes 700,000 per year.
The total return on investment annually is therefore kes 700,800 devide by kes 1,740,000 x 100%= 40.2%.Nairobi Stock exchange.
The 5 year average return on investment at the Nairobi stock exchange is 20% according to this report.
http://www.investinginafrica.net/african-stock-markets/african-stock-market-performance/
Therefore, the Southern Sunshine hotel investment is a good option compared to investing in the Stock exchange.
Comparison to other Nairobi apartments.
The usual middle class apartments for sale around Nairobi eg Syokimau, Kikuyu, Kitengela etc sell for an average of kes 5.5 million for a 2 bedroomed.
This can fetch a maximum of kes 25,000 to kes 30,000 per month in rent.This works out as kes 30,000 x12 =kes 360,000 per year.
The return on investment works out as kes 360,000 divide by kes 5,500,000= 6.5%.
If you compare the kes 360,000 annual rent derived from these apartments with the rent accrued from the Southern Sunshine hotel at kes 352,800, its very clear that for 1/3rd the investment, the annual rent is equal.
The kes 1,740,000 investment in the Southern Sunshine hotel is roughly 1/3rd of the kes 5.5million investment in the average middle class apartment.
The kes 352,800 annual rent accrued from the kes 1.7m Southern Sunshine hotel is nearly the same as the kes 5.5m apartment unit.Purchase a room.
To purchase the Southern Sunshine hotel unit, send an inquiry to info@a4architect.com.
To join the Southern Sunshine hotel discussion forum, click here below.
https://www.a4architect.com/discus/topic/joint-investment/page/6/Francis Gichuhi Kamau, Architect.
info@a4architect.com -
Rongai apartment feasibility study
Name Distance from tarmac Unit type Rent area.m2 rent/area Occupancy rate % Remarks 1
Greater Nile 120
1 bdm 8000
20
400
2
http://goo.gl/maps/5sUKi 120
2bdm 15000
60
250
80
Design has good lighting, ventilation. Low cost finishes.Parking 3
http://goo.gl/maps/LbUos 300
2bd, 3 bd 17000
60
283.3333
90
Good light, vetnilation, parking, middle cost finishes. 4
http://goo.gl/maps/rNeQm 300
2bd 12000
50
240
80
Good light, ventulation, middle cost finishes, parking 5
http://goo.gl/maps/XlyQU 350
2 bdm 15800
70
225.7143
70
Poor light, ventilation, minimum parking 1bd 10800
40
270
80
bedsitter 7000
20
350
100
6
http://goo.gl/maps/9zjtA 450
2 bd 14000
60
233.3333
80
good light, ventilation, parking 7
http://goo.gl/maps/kWo0l 130
2bd 15000
60
250
100
good light, ventilation, parking, high cost finishes. 1bd 10000
30
333.3333
100
bedsitter 7000
20
350
100
Analysis. Apartments that have poor light, ventilation and no parking have the lowest occupation rate. In one apartment, we found that a 1 and 2 bdmed unit have been unoccupied for the last 3 years. Apartments with good design, good finishes and ample parking had the highest occupancy rates. There were no vacant houses . The proposed design has the best cost per rent, at kes 400 per m2, compared to the others. The closest to match the proposed profitability are the bedsitters renting at kes 7,000, with kes 350 per m2. The proposed design is an improvement of a bedsitter since the bedspace will be private from the living area, hence justifying kes 8000 rent. 1 bedroomed units also have good returns at kes 333 per m2. The 2 dedroomed units have been consructed too many, hence stiff competition, resulting in lower rental prices, hence less profitable. Most 2 bedroomed units had an average of 80% occupancy with low rents . Most bedsitters had 100% occupancy. http://classifieds.capitalfm.co.ke/property/residential-property-to-rent/flats-appartments-to-rent/africa/ke/nairobi/nairobi/bedsitter-to-let-rongai-211721.html The above bedsitter is renting for kes 8000 and is 200m form tarmac and has 100% ocupancy rate. http://www.buyrentkenya.com/bedsitter-to-let-tumaini-flats-for-rent-in-nairobi-ongata-rongai-8000-kshs-in-kenya-2013~adv3989.htm The above link shows bedsitters being rented out for kes 8000. The bedsitters are currently at 100% occupancy and the rate has since been hiked upwards to kes 9,000 http://www.wanasoko.com/post.php?postid=71474 The above link shows somenone looking to rent a bedsitter in Rongai, showing the high demand and low supply of the same. From the above, we can observe that bedsitter rents are rising while 2 bedroomed rents are going lower. Bedsitter rents give the best return . 14166.67
Francis Gichuhi Kamau, Architect.
info@a4architect.com -
Southern Sunrise Hotel, Southern Bypass, nairobi. Sale price.
The Southern Sunrise Hotel is located along the Southern Bypass near Thogoto town.
There are 21 hotel rooms for sale.
20% of the rooms are already sold out.
The Hotel room is valued at kes 5,000,000.
The sale price is KES 2,000,000 with a 15% increase after every 5 buyers.
Payment.
The money is to be paid to PRISM DESIGNS AFRICA, National Bank of Kenya,Harambee Avenue branch. Account No. 0124132116800.Francis Gichuhi Kamau, Architect.
info@a4architect.com -
Southern Sunshine Hotel room investment. Comparison to Stock market.
The Southern Sunshine Hotel , developed along the Southern Bypass near Thogoto town, is being sold to investors per room. 33 rooms are available for sale.
Investors will then be paid the rent income generated .
The initial assumptions are as below.The Hotel will have an occupancy rate of 70%. Newer hotels in nairobi eg Sunstar Hotel off Thika superhighway is already recording 70 to 80% occupancy rate.
The Southern Sunshine hotel is located right next to the busiest bypass in Kenya so it will not be a tall order for the hotel to get close to 100% occupancy rate.
Assuming someone buys the hotel room for kes 1.8million, this translates to 20% return on investment.
Assuming kes 1,500 per night for 30 days x 70%=kes 31,500 per month. This is kes 378,000 per year. This translates to 21% return on investment which will be increasing every year as occupancy rises.Rent at the nearby Wida Highway motel for a similar room is kes 5,600 per night.
http://www.hotelwida.com/rates.htmlThis means this kes 1,500 estimated rent has the potential to rise to kes 5,600 over the years.
There is also a 20% annual increase in property value capital gain.Stock Exchange option.
Assuming someone invests in the stock exchange, the annual Return on Investment is also 20%.
http://www.investinginafrica.net/african-stock-markets/african-stock-market-performance/
The difference is that in the stock exchange, the capital gains are not high.
The Return on Investment calculated for the stock market includes capital gains accrued from sale . ROI for real estate only includes monthly rent gains hence akin to eating your cake and still having it.http://www.teensguidetomoney.com/investing/stocks:-buying-selling–researching-/calculating-your-return-on-your-investment-roi/
In the stock exchange, there is also a danger of negative return on investment/losses.
In the hotel option, there are no risks or losses since the location guarantees rental income. Its virtually unheard off for property next to a busy international highway not to have good tenancy income.
To purchase a room, email info@a4architect.com.
Francis Gichuhi Kamau, Architect.