Author: A4KENYA

The cost of construction finance loans in Kenya keeps rising. The paper work and conditions needed for a land owner to fulfill before loan issuance such as meeting 30% cost of construction, another income sufficient to service debt during the construction process etc. keeps many people away from accessing bank loans for constructing.

Self Funding.Zero Debt.

a4architect.com offers a solution to this through self funding Joint Venture financing method whereby the land owner subdivides his property into several sectional property subdivision then sells approximately 2/3rds of the properties to raise the cash needed to construct on the remaining 1/3rd of the property.

Sectional Property Resale.

a4architect.com works with land owners to come up with the sectional properties, raise the capital through resale of the sectional properties and design, manage to completion the 1/3rd portion remaining so that land owner can begin to benefit from rental income.

Forced Bank Sale.

A4architect.com sectional property debt free construction financing method ensures land owner develops his property without the risk of bank attachment in case of non repayment of loans. a4architect.com assists land owner to mobilize their current resources to unlock capital for construction without debt.

Land Compensation.

The loss of horizontal surface of land to sectional property buyers is compensated by constructing vertically to the maximum number of storeys allowed. Around Nairobi and many other towns in Kenya, residential areas such as Rongai, Umoja, Ruiru, Mtwapa, Nyali, a land owner can develop up to 8 floor levels. This vertical increase in new floor area can be developed to bring in additional rental income in future.

Contacts.

Land owners that would like more information on constructing debt free can contact a4architect.com below.

Architect Francis Gichuhi kamau.

gichuhi@a4architect.com

0721410684

100% Financing for construction projects on Joint Venture basis method is achieved through sharing ratio[usually 70%:30%] on the project value. For example, a 10 maisonette project on a 1/4 acre plot will have 7 units going towards financing the 3 units which will remain with the land owner for rent collection or sale as per their liking.

Profit Sharing Ratio.

a4architect.com arranges for land owners with prime land in urban areas around the country to realise and fund their construction projects through using 70% of their units to finance the remaining 30% . The 70% of the units are usually sold to the market under sectional property subdivisions .

Feasibility Study.

a4architect.com carries out initial feasibility studies to determine the viability of a piece of land to self fund through sectional ownership. Generally, land located in a prime location, near a main tarmac road or a shopping center, surrounded by high rise buildings and maisonettes, is usually ripe for self funding through sectional property resale method.

Land Size.

Any land size, from 1/8th acre to hundreds of acres, is viable to self fund through this method as long as its located in a prime developed area that can attract sectional property buyers. Areas such as Nairobi, Nakuru, Nyeri, Mombasa, Kilifi, Diani,Malindi, Kisumu,Kakamega, Meru are good locations for self funding of projects.

Feel free to contact a4architect.com below for feasibility study on your land to check how viable it is to self fund.

Architect Francis Gchuhi Kamau.

gichuhi@a4architect.com

0721410684

Investing in Kenyan Real estate poses several risks as outlined below.

Market Risk.

This risk is associated with feasibility. The investment is supposed to have a feasibility study done so as to know and ascertain which market segment to target. For example, an investment in Kileleshwa/Kilimani will have a different design from an investment in Kiayole/Dandora areas due to different market segment targeting.

a4architect.com carries out detailed feasibility studies for investors. The a4architect.com sectional property investment where investors can own a maisonette or bedsitter apartment block under sectional title usually has detailed feasibility studies done to ensure the right customers are targeted for the investors. In the coast region, Nakuru, Nairobi, the Airbnb target market is usually a safe bet.

Physical Property Risk.

These are risks such as construction structural failure like the one that happened recently[2021] at a condominium in Miami

https://nypost.com/2021/07/22/condo-collapse-victims-to-get-150m-in-compensation-florida-judge/

A4architect.com ensures that all buildings designed and constructed for investors in the sectional property investment go through the highest engineering designs standards as stipulated in the Building Code.

A4architect.com also designs the buildings in such a way that long term maintenance is reduced through careful selection of building materials and finishes that are long lasting and cost effective.

Liquidity Risk.

This measures how easy and fast it is to sell off the property after investment. It also measures how much the property is supposed to appreciate in value after investment. A4architect.com ensures that the sites available for sectional property investment are located in prime areas such as close to beaches around Diani or close to Eastern Bypass in Utawala area. Investors in such locations can easily find a buyer for their properties and at a higher sale price than they bought it since location is very prime. For example, a maisonette sectional property land located at Utawala, 200meters from the Eastern Bypass, selling at kes 750,000 per sectional property, will appreciate in value and easily offload into the market faster than say a kes 750,000 plot of land located further down Kangundo road in Malaa area.

The Utawala sectional property, even tough smaller in surface area than the Malaa larger one, has got more potential since investor can opt to build own residence and easily commute to and fro to work safely or build bedsitters or a 4 bedroomed maisonette and rent at a good rate compared to the Koma/Malaa/Joska plot where commuting to and fro to work and getting a good rental income is a tall order.

Invest now.

A4architect.com Sectional Properties are available for investors from various ranges between kes 400,000 to kes 3,000,000 per sectional property in different prime locations around the country.

Architect Francis GichuhiKamau.

gichuhi@a4architect.com

0721410684

Investing in Real Estate in Kenya requires diversification so as to ensure constant return on investment. Diversification of locations such that there is a vacation rental in the Kenyan coast/Diani/Kilifi/Watamu, vacation rental in Nariobi, Nakuru, Kisuu, Busia etc.

This can be achieved without having to break a bank by simply investing in sectional properties offered by a4architect.com.

Sectional Property.

Ministry of Lands led by CS Farida Karoney recently enacted the sectional properties act that allows for people to own title deeds to maisonettes standing on less than a 1/8th acre 50ft by 100feet plot.

https://lands.go.ke/conversion-of-land-title-deeds/

Sectional Property Investment.

a4architect.com enables real estate investors to take advantage of this new law to own maisonettes in various prime locations around the country at very affordable rates.

A4architect.com compiles available prime lands around the country that are available for investors to come in and own. In Diani, a 1/8th acre around Diani Beach road close to the beach goes for kes 5m. This maybe quite steep and out of reach for many investors or the land may be too big for 1 investor. A4architect.com makes it easier for investors by deviding the plot into 4 parts , creating 4 maisonettes whereby the kes 5m price is divided into 4 parts , coming to kes 1.25m per land portion.

Once an investor purchases the land portion on which their maisonette will stand, they have their own sectional title and can either resell the vacant portion or build their maisonette slowly in phases over the years depending on their financial capability.

A 1/8th acre plot in a very prime location in Nairobi fronting a major highway goes for kes 10m. A4architect.com enables easier access to such a property by deviding the plot into 4 parts and reducing the acquisition of the maisonette plot to kes 2.5m.

Plot owner can now develop their property owned under sectional title at their pace.

Same case with other prime locations in Nyeri, Nakuru, Meru, Kisumu, Kakamega and Busia.

As the old adage says, there are 3 important aspects to consider in real estate investments.

1.location

2 location.

3. location.

Once investors get it right on location, they can be assured of near 100% occupancy rate for their investment and over 25% land appreciation rates per annum.

Other locations available.

Investors can contact a4architect.com for more available real estate investment sectional property deals around the country.

Architect Francis Gichuhi Kamau.

gichuhi@a4architect.com

0721410684

Steel.

Twisted steel price for D8 reinforcement bar was kes 400 in 2014. Current[2021] price for the same D8 is kes 550.

This represents a 37.5% increase for the last 7 years, around 5% increase per year.

Mabati.

Steel roofing mabati sheet prices for gauge 32 , 2meter long , was selling at kes 400 in 2014. Current price[2021] is kes 680. This represents a 70% increase during the last 7 years, working out to a 10% annual increase.

These increases are in tandem with Kenya’s inflation rate of between 5 to 10% per year.

The last 1 years has had a higher inflation rate due to effects of COVID 19 on the global economic environment.

Last year[2020], inflation rate in Kenya rose to circa 6% from lows of 4% in previous years and has now stabilised to 5.7% currently. Source https://www.centralbank.go.ke/inflation-rates/

Construction cost.

Construction costs will also follow the same rates in increase. The cost estimates for low cost housing 7 years ago are now obsolete. The cost estimates for high class housing 7 years ago are now for middle class housing. The cost estimation for middle class housing is now for low cost housing.

The rate of inflation helps to give a good estimation of what cost of construction will be like in the coming years.

Architect Francis Gichuhi Kamau.

gichuhi@a4architect.com

0721410684

How investors are enticed back into real estate developments

Real estate projects in Kenya have for the last few years witnessed scenarios where investors have lost their hard earned cash in property deals tat did not materialize as envisaged.

https://www.businessdailyafrica.com/bd/news/troubled-ekeza-sacco-begins-refunding-members-deposit-2276306

https://www.standardmedia.co.ke/business/real-estate/article/2001371299/agony-of-banda-homes-investors

https://www.standardmedia.co.ke/nairobi/article/2001380956/bloggers-barred-from-publishing-libellous-articles-against-urithi-housing-firm

Exlusive: Redeemed Pastors In N600m Scam

Humans have a nesting and homing instinct. Humans produce hormone estradiol, which, among other things, results in an uncommonly strong desire to organize and clean. Humans are territorial animals, with deep desires to mark and protect our territories. Every human being desires a home, hence amidst all the litigation happening in Real estate projects in Kenya, Kenyans still re demanding for houses. The negative publicity has not dented Kenyans’ need for land and housing.

Abraham Maslows hierarchy of human needs puts Shelter at the bottom, meaning that housing will always be in demand no matter the situations happening. No matter how many scandals appear on Kenyan real estate scene, Kenyans will always find different permutations and combinations to access housing for themselves.

Driving force of crowdfunding in real estate development. Investor decision dependence on crowdfunding initiatives

Crowdfunding is a method of real estate finance and development whereby land owner attracts investors who put in small fractions of the total whole project. This enables investors to own prime real estate without breaking the bank, literally. This financing method keeps banks and their high interest rates away from projects directly. Banks can play by financing individual investors with personal loans. In other projects, banks finance land owners with construction loans which are quite tedious in needed paper work and risky in case of default.

The ease of investment since the huge total construction cost is divided into small parts where many investors can afford, makes crowdfunding very marketable in Kenya.

‘Sponsor’ or ‘operator,’ reputation impact on the crowdfunding investment in real estate development.

The crowdfunding sponsor needs to be of impeccable reputation so as to enable investors feel confident to invest through them.

Consumer protection laws in Africa are generally very weak. Also, some unscrupulous real estate investors take advantage of the fact that neo colonization in Africa is still present , hence many Africans trusting projects that seem to be sponsored by Caucasians . Some have used this as a bait to fraud Africans eg in Ivory Coast.

In the recent case of Cytonn, it was evident that alot of investors usually don’t read the fine print before putting their money on the stake.

https://www.standardmedia.co.ke/business/financial-standard/article/2001418103/cma-admits-it-lacked-powers-to-protect-investors-lost-billions

The amount of funds invested in real estate through crowdfunding.

Crowdfunding is quite new into the Kenyan Market. By now, Billions of shillings have already been invested ito crowdfunded real estate .

https://nation.africa/kenya/business/ponzi-cost-kenyans-sh1-billion-cma-reveals-3467100?view=htmlamp

Impact of crowdfunding initiatives in the marketing of real estate developments growth.Attitudes of the crowdfunding promoters in the real estate developments.

Crowdfunding will enable many more people participate in real estate. Before crowdfunding, only a few rich peole who could amass the hundreds of millions needed to invest in prime properties could play the real estate field in Kenya. With crowdfunding, the huge real estate projects are cut into smaller portions which are within financial reach of many Kenyans. This will impact on Kenyan real estate with most prime properties in urban areas of Kenya finding access to capital easier. Land buying into far off hinterlands which was a common way for investors to play into real estate will slowly give way to much better methods such as crowdfunding which have better and higher return on investments.

Architect Francis Gichuhi Kamau.

gichuhi@a4architect.com

0721410684

The Miami Champlain towers was built in 1981 .

Sale price then was USD 140,000, approximately KES 14million.

Current sale price of the 2 bedroomed unit is approximately usd 600,000, kes 60,000,000

This works out to around 10% price appreciation per annum from 1981 to 2021.

In Kenya, land appreciate at around 20% per annum.

Apartment appreciation rate in Kenya is much slower. Apartments that sold for kes 15m in Kileleshwa 5 years ago are still selling for same amount, meaning zero or minimum appreciation rate.

A similar sized beach apartment in Diani for example, costs approximately kes 20,000,000, 3 times lower than the Miami one at kes 60m.

Developer.

The Miami condominium apartments were developed by Nathan Reiber. He was born in Poland, migrated to Canada then USA . Architectural designs were done in the late 1970s.

Nathan Reiber served as the Assistant Vice President for the Jewish Institute of National Security Affairs . He died on 1st July 2014.

Architect Francis Gichuhi Kamau.

gichuhi@a4architect.com

0721410684

[youtube https://www.youtube.com/watch?v=TrP-Zl7NHzE&w=560&h=315]

The Miami Champlain towers building was constructed in 1981, making it 40 years old. Its next to the ocean, front row. This proximity to the ocean means that the air and moisture around it has elements of salt within it. Salt accelerates steel reinforcement corrosion. This corrosion reduces the size of the steel diameter and also reduces the grip of the steel reinforcement on the concrete surrounding it.

Steel Rebar.

This reduction in size of rusted steel and loss of grip is especially very dangerous on the columns that support the building’s weight, especially the columns in the lower part of the building, foundation and 1st floor.

The Champlain building had a basement parking where the columns had visible rusting and concrete cancer on the lower parts. A recent structural engineering report had recommended repair of the affected columns but was not effected.

Sale value.

The 3 bedroomed apartments were valued at kes 100,000,000 per unit. The owners had an association where they managed the affairs of the building block such as repairs . The management had in 2020 contracted Engineer Frank Morabito to check on the structural viability of the building.

Management.

Condominium apartments usually have problems with management unlike rental apartments where there is only 1 owner so information flow is easily acted on. In condominium sale apartment situations, the board is elected from the owners hence abit slow in acting on issues. In the Miami case, after the structural engineer gave out his report, the management board took long to act on the issues raised until the building collapsed.

Kenyan Coast.

Apartment ownership in Kenya is on the increase around the city, Kilimani, Upper Hill areas and around the Kenyan coast, Watamu, Diani, Mombasa areas. This Miami building collapse case should be a wake up call to apartment building owners to ensure that their building blocks are regularly checked by structural engineers and action is promptly taken to repair any issues raises especially for the apartments around the coast, Mombasa, Diani, Shanzu, Watamu etc.

Architect Francis Gichuhi Kamau.

gichuhi@a4architect.com

0721410684

This architectural design is engineered to enable smooth running of the unit as an AirBnB business.

The ground floor level is utilized as a car parking that can comfortably park 3 cars under 1 particular unit.

The 1st floor level is designed to accommodate the living room and open plan American style kitchen. This living room and kitchen is designed to serve the 3 bedrooms in the other 2 floor levels, i.e 2nd floor and 3rd floor,

This unit can be occupied as a 3 bedroomed home and can also be occupied as 3 floor levels with a bedsitter unit per floor.

This flexibility of design from a 3 bedroomed unit into 3 spacious bedsitter units makes it very friendly for the AirBnB business set up.

The house owner can use the house as a 3 bedroomed marionette or as 3 separate bedsitters depending on the market situation. Bedsitter option with double bed and 2 sofa beds seems a very marketable airbnb venture since many visitors usually prefer that typology of room compared to a complete 3 bedroomed unit.

House owner can also decide to live in the house as a 3 bedroomed unit as they weigh in on airbnb monetizing options in future.

Architect Francis Gichuhi kamau.

0721410684

gichuhi@a4architect.com

Consultants required in a Residential Apartment Building Construction.

Construction of an apartment building in Kenya commences with the developer nurturing the idea to develop.

Land Acquisition.

The first step towards constructing is acquiring land. The land acquired should be in an area where demand is high, hence need for high rise apartment construction. Areas where land is low cost will not be viable for high rise construction since the cost of acquiring land is low hence makes more economic sense to build low rise bungalows and extend horizontally.

Architectural Design.

After land is acquired, the developer is required to source for an architect to come up with the architectural drawings for the house. These drawings are designed to capture the aesthetic appeal of the developer, get the developer’s taste eg African design, Arabic, Mediterranean, modern flat roof style etc.

Once the style is to the liking of the developer, the architect then works out the sizes of the rooms and the typology eg if 1,2,3 bedroomed or bedsitter depending on the feasibility study and demands for the particular area.

Costing.

Once the architectural design is complete, the developer is required to source for a Quantity Surveyor to work on the cost estimation for the project. This will help the developer manage their budget well.\

Structural Engineer.

After project costing, the architectural drawing is shared to a structural engineer whom the developer also sources. The structural engineer determines the supporting structure of the building eg size of columns, steel reinforcement type of slab etc.

Electrical and Mechanical Engineers.

After structural engineering is through, the developer is required to source for an electrical/mechanical services engineer to come u with electrical wiring and plumbing drawings.

Plumbing drawing

County Government Approval .

The developer is required to lodge the architectural and structural drawings to county government department of planning for building approval.

The county government planner checks if the construction is as per the county’s set bye laws eg how many floors allowed, whether the building fits within the plot without encroaching to the road or neighbors, whether there is a safe sewerage disposal method etc.

If the building complies to the particular bye laws, the County Government gives an approval letter. The developer is required to erect a sign post at the building entrance showing the approval number and consultants involved in the approval process.

Actual construction.

The developer is required to source for a building contractor registered with NCA. After negotiations on construction costs , the developer and contractor enter into construction agreement whereby the consultants supervise the building construction process to completion.

Property Manager.

After construction is complete, the developer is required to source for a property manager to help source for tenants, collect monthly rent and carry out minor repairs during occupancy.

Architect Francis Gichuhi Kamau.

0721410684

gichuhi@a4architect.com