Apartment construction in a higher cost land, 1/8th of an acre say in Umoja area, costing kes 10m vs apartment construction in a lower cost land costing kes 3m say in Kitengela areas.
Umoja 1/8th land kes 10m analysis.
A 1/8th plot is 500m2 in area. The price per m2=kes10m/500m2=kes 20,000 per m2. A 2 bedroomed apartment of 80m2 will have land value as 80m2 x 20,000=kes 1.6m.
This house will bring in kes 30k per month rent. The return on investment will be 5 years .
Kitengela kes 3m per 1/8th plot land analysis.
Price perm2 for the land=kes3m/500m2=kes 6000 per m2.
A 2bedroomed apartment, 80m2 , will have land value at kes 6000 x 80m2=kes 480k. The rental income brought in will be kes 20,000 per month. The return on investment will be 2 years.
Conclusion.
Return on investment for apartment buildings in lands of lower costs are higher than in lands that are at higher costs. This is assuming the cost of construction in both scenarios is held constant. Lands in more prime locations, which are more expensive, have an advantage of higher occupancy rates. Lands in lower cost areas, where rents are low, have an advantage of a much faster return on investment.
Architect Francis Gichuhi Kamau.
gichui@a4architect0721410684
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