Month: May 2014

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Wood suitable for making a suspended floor slab in Kenya is readily obtained from Mahogany, Pine or Cypress throughout the country.

Mahogany tree.

Cypress tree.

Pine tree.

Costs per linear foot.

Mahogany costs kes 200 per linear foot.
Cypress costs kes 66 per foot and Pine costs kes 60 per foot.

Mahogany is the best in terms of aesthetic appearance , longevity and strength , followed by Cypress then pine.
Pine wood tends to easily warp after some time hence mostly used for formwork which is temporary, around 30 days use.

Cypress doesn’t warp easily and can be used for external works such as roof trusses, fascia boards etc. It tends to grow dark and mouldy when sawn smoothly using wood smoothing machines.

Costs per m2.

From the above costs, Mahogany costs kes 1,400 per m2 of surface for a 2 inch thick surface. Pine costs kes 1,200 and Cypress costs kes 1,400 per m2 of a 2 inch thick slab.

Support.

The timber slab will need support costing around kes 300 per m2.

Labour and transport on average can cost 30% of material cost=30% x kes 1,400, assuming use of cypress, which is most commonly used .This comes to kes 420 per m2.

Total cost of a cypress slab will therefore be kes 420 + kes 300+ kes 1,400=kes 2,100.

A concrete slab costs around kes 2,600 per m2.

Concrete has superior qualities in that it is easy to clean, does not rot due to water/moisture, is long lasting, adds to structural strenthg of the house, reduces noice transmission, etc.

Therefore, most people investing in buildings especially for rent whereby they expect low maintenance will dig deeper into their pockets by 24% to use concrete slab instead of wood.

Uses in Kenya.

Notable wooden slabs in Kenya are KI restaurant in Parklands.

Ecological effect.

Trees help to remove excess carbon dioxide from the air, thereby making the air we breath fresher. Trees also give us the oxygen we breath.

The tree trunks are made of carbon obtained from the C02 gas in the air. Trunks are storage mechanisms of excess carbon in the atmosphere. When trees are cut, the earth finds it more complicated to remove excess C02, leading to greenhouse gas effect which leads to droughts. Also, when trees are cut, the earth lacks a mechanism to clean the air and produce oxygen, leading to more pulmonary diseases.

Therefore, alternative construction methods such as concrete which saves on use of trees should be encouraged.

Francis Gichuhi Kamau, Architect.

Within the recent times, Kenya has had the unfortunate events of being attacked by terrorists.
These terrorists seem to specifically attack malls and public transport. Recently, a hotel along Mombasa beach was also attacked using grenades. In 2002, a hotel at the coast was also attacked by a suicide bomber.

Since the 9/11 terrorist attacks in the USA, terrorists have picked on hotels as good targets due to the fact that most hotel users tend to be the elite locals or Business men from the West. The Mumbai hotel attacks at the Taj Mahal hotel in 2008 gives a clear picture of this.

Designs that are enclosing, with very few large openings to the outside, can make it easy for attacks where terrorists hold the hotel siege for hours or days.

http://en.wikipedia.org/wiki/2008_Mumbai_attacks

A design that enables all the rooms to directly communicate with the outside through large openings is best situated to discourage this type of attack.

In the Southern Sunshine hotel picture below, notice the staircase area and the corridor access to al rooms is open to the outside hence no room or cover for any terrorist to hide and take the building siege.

Such a design makes rescue operations very easy in case of terror attacks and fire. This ensures safety of the occupants.

Number of rooms.

Terrorists prefer to attack hotels which accommodate allot of people. Hotels with fewer rooms will therefore not be at risk of attacks. The Southern Sunshine hotel, along the Southern bypass, has 28 rooms hence not a good target for terrorism. The fewer number of rooms also enable the hotel staff to give the occupants a personal touch, thereby inhibiting chances of terror attacks further.

Recently, the USA issued warnings against possible terror attacks on two Sheraton hotels in Abuja, Nigeria, during the recent World Economic Forum meetings.

http://www.reuters.com/article/2014/05/03/us-nigeria-violence-idUSBREA4204Q20140503

IN July 2010, Alshabab terrorists attacked a restaurant in Kampala, Uganda, killing 76 people as they were watching a soccer match.

Recently,in November 2013, Al shabaab militants rammed a car packed with explosives at a hotel in Mogadishu, Somalia, killing 5 people.
http://usa.chinadaily.com.cn/world/2014-03/20/content_17363642.htm

http://www.cnn.com/2013/11/08/world/africa/somalia-attack/

Designs whereby its impossible for someone to drive a vehicle close or into a building will go a long way of preventing such attacks. Barriers and bumps should be placed around the building such that only vehicles moving very slowly can access or be close to a building, with security guards well trained to look for possible booby traps.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

Currently, most Kenyan banks are offering loans at an average of 15% p.a interest rate.

There are methods whereby someone in Kenya can invest in Real estate whereby the interest rates automatically cancel out with the monthly income.

This way, an investor can sit back, relax, and watch the bank buy the real estate investment while the investment pays back the loan to the bank.

Average apartment cost.

The average apartment or 2 bedroomed house for sale in the Nairobi surburbs, middle class areas eg Syokimau, Kitengela, Kiambu, Ruiru e.t.c costs kes 5m.

This apartment or bungalow can bring in at most a monthly rental income of kes 25,000 on the higher side.

This means the average monthly income of a kes 5m investment in Kenya is around kes 25,000.

Using the below Coop bank loan calculator, a kes 5m loan will require payments of kes 70,000 monthly for the next 15 years.

Loan Calculator

This means an investor for the kes 5m property will need to pay the bank kes 70,000 which he offsets with the kes 25,000 rent. The investor will need to collect the kes 25,000 rent then add a further kes 45,000 from other sources eg salary to pay off the bank for the next 15 years.

Solution.

Solution to the above is for the investor to find a real estate investment option whereby the monthly loan repayments are equal to the rental income. This means the investoer will only need to sign the sale contracts then sit back and watch the investment monthly income compleytely offset the bank loan repayments till the loan is fully repaid.

Such an investment is the Hotel room sale at the Southern Sunshine hotel along the Southern Bypass, Nairobi.
See the hotel documentation here

https://www.a4architect.com/buy-a-hotel-room-along-the-southern-bypass/

When an investor buys the hotel room, the worst case scenario of income is calculated as below.

Hotel monthly income calculation for worst case scenario.

The daily rates per night are estimated at the worst case scenario of KES 1,400 Daily.

This brings the total income per room to kes 1,400 x 30 days =kes 42,000.

The occupancy rate is also estimated at 80%, bringing the income to 80%x kes 42,000=kes 33,600.

The hotel running costs, toiletries, water bills, salaries etc bring this down by 20%, to bring the income to kes 27,000.

The take home amount monthly for the investor is kes 27,000 at the worst case scenario.

Using the Coop bank loan calculator below, the kes 2m investment will require a monthly loan repayment of kes 27,000 for a 15 year period.

Loan Calculator

2 options available.

The investor therefore has 2 options.

1.
Use kes 700,000 personal savings to buy the hotel room then borrow kes 1.3m from the bank as a personal loan to repay in 6 years. The repayments will be approx. kes 27,000 for the next 6 years which can be easily offset automatically by the hotel room monthly income of the same amount.
This way, the investor will have used their kes 700,000 savings then the bank enabled them to acquire the full property in 6 years without the pinch of heavy monthly loan repayments.

2.
If possible to get a 15 year long term loan, the repayments at 15% p.a interest rates are kes 27,000 per month, equal to the minimum possible income earned from the hotel room investment.

Using the above methods, a real estate investor in Kenya can easily , smartly and smoothly harness the power of banking loans to become an owner of a real estate investment that can earn them good money and financial freedom over the years.

Francis Gichuhi Kamau, Architect.
info@a4architect.com
+254721410684

New Real Estate investment opportunities are coming up in Kenya, inspired by opportunities available in developed nations such as USA and South Africa.

Investments whereby several people come together to pool resources such that they can be able to afford the best land location have been developed.
A4architect.com has come up with such an investment along the Southern Bypass, Nairobi, near Thogoto/Kikuyu town for the development of a boutique hotel whereby the hotel rooms will be sold off to investors.

Currently, the hotel rooms are 20% sold out.

Valuation.

Using the valuation method whereby a 15 year period is selected to be the benchmark for return on investment, with a monthly earning of kes 1,400 per night x 30 nights x 80% occupancy rate,=kes 33,600 per month.
A further 20% is deducted for the day to day running cost=kes 26,880.
KES 26,880 is the amount an investor is expected to earn per month . This amount is expected to rise in future as the room occupancy increases from the estimated 80% to nearly 100%.

Using the kes 26,880 per month, for 15 years, the amount will be 15 years x kes 26,880 per month x 12 months =kes 4,838,400.

This kes 4.8m is the fair value of the hotel room.

Current sale price.

The current sale price is less than half of the actual value.
Check the sale price here
https://www.a4architect.com/2014/02/17/southern-sunrise-hotes-southern-bypass-nairobi-sale-price/

This means investors will buy at less than half the actual value and therefore can later on resell at the actual value or cash in on the monthly income.

Comparison with other investment options.

Other investment options that have the capacity to bring in kes 27,000 monthly cost around kes 5m to kes 6m e.g. the apartment blocks along Mombasa road, Syokimau area.
http://mlolongo.olx.co.ke/2-and-3-bedroom-executive-apartments-for-sale-in-syokimau-estate-mombasa-road-iid-608033389

http://nairobi.olx.co.ke/3-br-apartments-to-rent-in-nairobi-embakas-kes-27-000-iid-618432299

From the above examples, its clear that for an investor to earn kes 27,000 per month from real estate in Kenya, they need to fork out approximately between kes 5 to kes 6m.

In the a4architect.com hotel investment, the investors can earn kes 27,000 monthly with an initial investment of less than half as shown below

https://www.a4architect.com/2014/02/17/southern-sunrise-hotes-southern-bypass-nairobi-sale-price/

Bank Finance.

The a4architect.com hotel investment can be easily re-payed in full if someone opts to take a bank loan.

Using the Coop Bank mortgage calculator below, for a kes 2m loan for 15 years, the repayment per month is kes 27,000.

Loan Calculator

This means that investors with easy access to bank loans can take out a kes 2m bank loan and sit comfortably as the hotel room repays itself fully for the next 15 years. In Kenya, its next to impossible to find such real estate investments whereby bank loans can easily offset 100% the investment.

For example, investments that earn kes 27,000 monthly, costing kes 5m , will need an investor to pay the bank kes 70,000 per month for the next 15 years and yet the investment can only bring in kes 27,000, hence the investor sourcing the balance of kes 70,000-kes 27,000=kes 43,000 from other sources or businesses, which is not prudent.

With the a4architect.com Southern Sunshine hotel investment, for the same monthly income of kes 27,000, an investor will sit back and watch the bank repay his investment form their smart decision.

See the Southern Sunshine Hotel title deed copy, company registration certificate and other details here
https://www.a4architect.com/buy-a-hotel-room-along-the-southern-bypass/
Contact the below undersigned for more details.

Francis Gichuhi Kamau, Architect.
info@a4architect.com
+254721410684

In Nairobi, there are bye laws created in the late 1970s that ensured that all land owners must lay infrastructure such as roads, sewer, water before the County planner allowed them to subdivide and sell of the plots.
These laws allow for a small percentage of the land, say, 20%, to be issued with tittle deed with the land without infrastructure to enable the land owner raise capital to lay the infrastructure.

This is the genesis of the recent NSSF issue with the Tassia land owners whereby NSSF was forced to lay infrastructure, many years after it sold the plots.

If such laws were enforced by all County planners, Kenya’s real estate would be internationally competitive, similar to USA or South Africa.

Economies of Scale.

When such laws are enforced, the cost of laying tarmac roads becomes affordable. For instance, if a land owner wants to subdivide 10 acre of land, this translates to 70 plots. By adding kes 200,000 per plot on top of his sale value, he will raise kes 14m, which is enough to tarmac 0.5km of road, for a non-heavy duty carriageway. A 10 acre plot has around 0.5 km of road.

For low cost lands, the planners can specify use of murram roads which will cost kes 3000 per m, translating to kes 3m per km. For the 0.5km, this translates to kes 1.5m. The 1.5m is devided into 70 plots =kes 22,000 per plot as an addition for the land owner to effectively lay high quality murram road.

This would go a long way in improving the living standards of Kenya’s real estate which will be a win situation fo all.
Francis Gichuhi Kmau, Architect.
info@a4architect.com