Author: A4KENYA

Rhapta road is located within the upmarket Westlands neighbourhood of Nairobi.

Buildings around Rhapta road are elegantly designed, with a mix of all international styles.

The typology of the surrounding buildings is high end offices and residential apartments, high rise.

Profit sharing for Joint Venture. 1.6 acre land.

Land Value.

1 acre sells at approximately kes 300million per acre in this area.

Built up area sale value.

This apartment of 200m2 is being sold along Rhapta road for kes 25,000,000. Cost per m2 for sale is kes 125,000 per m2.

40% to land owner and 60% to financier/developer.

In this scenario, total project cost including land value is kes 3.2 billion. Total project sales are kes 4.6 billion. This means profit is 1.3 billion.

At this profit sharing ratio, the land owner gets the value of the land at kes 390 million back and the developer gets the cost of construction, architectural, quantity surveying, engineering consultancy fees and bank interest rate financing back. There is no profit for both developer and land owner since the project only covers the cost of input.
The land owner takes home kes 700 million, which is the value of the land, plus half the profit, taking home kes 2billion.

30% profit to land owner and 70% profit to financier/developer.

In this scenario, we have 10 floor levels at a ground coverage of 50%.

The total cost of the project, inclusive of land value is kes 2 billion.
The total sale value is kes 1.6 billion.
At a 24% Return on Investment towards the whole project, the land owner can take home approximately kes 600 million.

50% profit gain.

This represents a 50% increase in profits , which is a good investment for the land owner. This value is set to appreciate over time as capital gain from increased property sale value.

15,600 m2 of built up area is expected to be constructed using this model.

Architect Francis Gichuhi Kamau.
info@a4architect.com

Sectional property for sale. Kahawa Zimmerman. 10 bedsitters, 1 one bedroomed unit near main tarmac road. Fully occupied. Kes 12m.

[googlemaps https://www.google.com/maps/embed?pb=!1m18!1m12!1m3!1d897.2593047707154!2d36.89577013436703!3d-1.210555610874311!2m3!1f0!2f0!3f0!3m2!1i1024!2i768!4f13.1!3m3!1m2!1s0x0%3A0x0!2zMcKwMTInMzguMCJTIDM2wrA1Myc0Ni44IkU!5e1!3m2!1sen!2ske!4v1458980816410&w=400&h=300]

Contact info@a4architect.com for more details.

28 acres next to Kasarani Stadium, Nairobi.

Owner seeking Joint Venture financier for construction of residential houses.

[googlemaps https://www.google.com/maps/embed?pb=!1m18!1m12!1m3!1d3865.7650045520113!2d36.88546416703807!3d-1.235237548328596!2m3!1f0!2f0!3f0!3m2!1i1024!2i768!4f13.1!3m3!1m2!1s0x182f15c194c7586b%3A0x650ed8ca43b749a5!2sNgumba+Estate%2C+Nairobi%2C+Kenya!5e1!3m2!1sen!2s!4v1458282740334&w=600&h=450]

Contact info@a4architect.com

10,000 acres land for sale at Taita Taveta, Kenya. Sale price is kes 180,000 per acre.

Near Voi town.

Land has 2 rivers flowing within it. Several boreholes and buildings.

Land has 2 titles each of 5000 acres.

Suitable for farming.

Email info@a4architect.com for more details.

[googlemaps https://www.google.com/maps/embed?pb=!1m18!1m12!1m3!1d2039146.6288917963!2d37.288137833036174!3d-3.42107222273739!2m3!1f0!2f0!3f0!3m2!1i1024!2i768!4f13.1!3m3!1m2!1s0x183bcef446b8f653%3A0xf19a9f9434fffc37!2sTaita+Taveta%2C+Kenya!5e0!3m2!1sen!2s!4v1458197904188&w=600&h=450]

Land cost. kes 3.5 billion.
Construction cost. kes 8.6 billion.
Profit. kes 2.8 billion.
Ground coverage. 30%
Number of floor levels. 10.
Built up area. 10000m2.

Thindigua town is located along Kiambu road, past Ridgeways and Runda , 11km from Nairobi CBD.
The close proximity to Nairobi CBD makes it a very prime area for housing, with several housing estates coming up in the area. The typology is mostly apartment,and land close to the main tarmac road costs in the range of kes 120 m per acre.

Land Availability.

8 acres of prime land, 200m from main tarmac road, within Thindigua town, is available for Joint Venture financing for residential units. See other lands available for Joint venture financing listed here https://www.a4architect.com/land-4-sale-joint-venture/

Number of units.

The 8.3 acres can hold approximately 600 residential units, each with at least 1.5 car parking spaces.

Land owner benefits.

The land owner can benefit by ending up owning at least 200 housing units in exchange for the land. These housing units cost at least kes 1.6 billion. The land that the land owner contributed, 8.3 acres, at kes 120m per acre, is valued at kes 1 billion. Therefore, for a contribution of land value of kes 1 billion, the land owner benefits from houses worth kes 2 billion. This represents a benefit of a minimum of 100%, having doubled their initial investment of kes 1 billion worth of land into kes 2 billion worth of housing.
This makes it a very good business deal for the land owner.

[googlemaps https://www.google.com/maps/embed?pb=!1m18!1m12!1m3!1d3235.822239450706!2d36.83432431408919!3d-1.2001266358751337!2m3!1f0!2f0!3f0!3m2!1i1024!2i768!4f13.1!3m3!1m2!1s0x0%3A0x0!2zMcKwMTInMDAuNSJTIDM2wrA1MCcxMS40IkU!5e1!3m2!1sen!2ske!4v1457693420512&w=600&h=450]

Development cost.

Land.8 acres. kes 1 billion.
Construction cost kes 3.4 billion.
Sale cost. kes 5.5 billion.
Profit at 23% Return on Investment. kes 1 billion.

Sourcing Joint Venture financiers.

A4architect.com links land owners with potential joint venture financiers and also offers joint venture financial advisory services to land owners.
Joint venture financing discussions usually take alot of time in board room negotiations until where the land owner and financier get to a point of agreement in profit sharing, whereby a4architect.com provides guidance in such negotiations. Joint Venture financiers are in several categories, with others preferring small residential projects, others preferring large commercial projects and others preferring mixed use development projects.
Depending on the initial feasibility study on the land as done by a4architect.com, a4architect can then direct the land owners to financiers who are most interested to the type of project that is envisioned.

Architect Francis Gichuhi Kamau.
info@a4architect.com

A joint Venture is a financing method for construction projects where the land owner contributes the land and a financier contributes the funds to realise a real estate project .
The land owner and financier agree on the sharing percentage based on negotiations between the two parties. www.a4a4chitect.com offers Joint Venture financing advisory for land owners who would be interested in financing their construction project through this method. a4architect.com also lists lands available for a joint Venture financing here https://www.a4architect.com/land-4-sale-joint-venture/

Special Purpose Vehicle.

A Special Purpose Vehicle limited liability type of company is formed where the land owner transfers the land to the company then the financier opens a bank account with the company name and transfers construction funds into the SPV bank accounts. This company now owns the land and the buildings being constructed and once the project is over and both the land owner and financier take ownership of their shares, the company is usually dissolved afterwords.

Land size and location.

Its important that the land owner has the land in a very prime place in proximity to a major town so as to assure the financier that the project, once completed, will attract end user buyers and renters. In most cases, joint venture financiers end up selling their share of the project while the land owners remain with hteir share and rent out, or sell part and rent out the rest.
The larger the land, the more attractive it is for financiers. For middle class housing, at least 10 acres and above is preferred. For CBD, Upper Hill, Lavington, Ngong road areas, 0.5 acres and above is preferred. For high class housing eg Karen, Runda, at least 5 acres and above is most preferred by financiers.
a4architect.com compiles land requests from joint venture financiers and links up land owners with potential financiers for joint venture projects.

Benefits.

The major benefit of a joint venture is that it enables a land owner realize income from developing their land without the land owner necessarily having to put in capital.
The average joint venture agreements usually gives the land owner around 20 to 35% of the housing units while the rest goes into financing the construction cost of the project.
Each project is different depending on the calculations that yield the sharing ratios between land owners and joint venture financiers. A4architect.com offers advisory services to land owners so that at the negotiating table with the financiers, the deal goes on smoothly without either party feeling shortchanged.

Bank loans.

Without a joint venture financing agreements, land owners are required to either raise the cash for construction from their own sources and savings or borrow loans from banks. Raising millions of shillings required to construct is a tall order for most land owners. Borrowing millions of shillings from banks also require that the land owner raise at least 30% of the construction cost, which run into millions of shillings, and also have the ability to service monthly interest, also running into millions of shillings. When land owners find themselves in this dilemma, the next best option becomes a joint venture.

Completed Joint Venture projects in Kenya.

Everest Park Apartments , Athi river.

Runda Park Apartments, Kiambu road.

Kigali Batsinda, Kigali

Westpoint Heihts, Kikuyu town.

Architect Francis Gichuhi Kamau.
info@a4architect.com

Septic tanks are systems that convert waste from toilets into biodegradable products to be released to the environment without harm.

They are designed with 2 chambers.
The 1st chamber has buffer walls to prevent non bio degradable objects from flowing to the drain pipes, leading to clogging and blockage.
The 2nd chamber allows for the waste water to be biodegraded into non foul smelling water which is then released into the environment through the drain pipe into soak pits.

Soil pipes at the 1st man holes enable foul smelling gasses to be released into the atmosphere at a level higher than the roof where none will be affected by the smell.

Time period.

Well designed septic tanks can last up to 15 years without the need to be repaired or emptied.
Grey water from the kitchen and bathroom, which contains anti biotic/antiseptic soap, should be drained seprarately and directly into the soak pits since the soap can render the septic tank inefficient.

Size.

The size of a septic tank is determined by the number of people the septic tank is to serve. In buildings with the new water-saving toilet types, less water used means that the septic tank will last longer.

The soak pit area should be as large as possible to enable seepage of the waste water into the surrounding soil.

In land where there is not enough space for septic tank and soak pit, a bio digestor is more efficient and suitable.

The anaerobic bacteria digest the waste in the septic tank and the soak pit area. On average, the waste takes 2 days though the septic tank into the soak pit area, a time which is sufficient to break it down into safer components for absorption into the environment.

In areas with poor drainage soil eg black cotton soil, its advisable to fill in the soak pit with large sized quarry chips to make the soakage faster.

For more info feel free to contact the below

Architect Francis Gichuhi Kmamau.
info@a4architect.com

Current market prices.Nairobi, Kenya

Sand
fine sand.1800 per ton
medium sand2600 per ton
coarse sand 2100 per ton
aggregate 2200 per ton
dust 1200 per ton

stone
1-2 cm diameter,55 per piece machine cut
2-3cm diameter, 65 per piece machine cut

Wood.
hard wood2*2*16,6 x2 240 per foot Mahogany
soft wood 2*2*16, 6 x 2 90 per ft cypress
plywood 0.012*1.22*2.44 sheet kes 800.

Brick.

Reinforced hollow brick 100*200*400mm
Reinforced hollow brick 150*200*400mm
Reinforced hollow brick 200*200*400mm
Reinforced brick solid 150*200*400mm,200*200*400mm
Permeable pavement bricks 60*100*200mm,80*100*200

Kigali Batsinda Estate is located in the outskirts of Kigali City, Rwanda.
Its financed through a Joint Venture between Kigali Batsinda Estate and Phatisa, a fund management corporation that manages Shelter Afrique’s Pan African Housing funds.

http://www.shelterafrique.org/index.php/pan-african-housing-fund-ends-year-with-first-close-at-us-41-5-million/

We have documented how a huge construction project starts from the very simplest idea and develops into a Mega structure years later. Check Part 1,2 and 3 here.

Part 1.

See Part 1 here https://www.a4architect.com/2016/02/kigali-batsinda-estate-the-making-of-a-joint-venture-project-in-rwanda/

Part 2.

See Part 2 here https://www.a4architect.com/2016/02/kigali-batsinda-estate-the-making-of-a-joint-venture-project-in-rwanda-part-2/

Part 3.

See Part 3 here https://www.a4architect.com/2016/03/kigali-batsinda-estate-the-making-of-a-joint-venture-project-in-rwanda-part-3/

Part 4.

Application for Rwanda Development Board incentives.

Here Philippe Kubwimana starts the process of applying for the Rwanda Development Board incentives so as to help reduce the eventual construction cost.

Water treatment designs.
2nd February 2012.
Philippe was requested by the Rwanda Environmental Management Agency for the waste water treatment designs since the land slopes into a river/swamp. a4architect.com organised for this consultancy service.

Songa Silving, the E.I.A expert, requested Philippe Kubwimana for the waste water engineering designs. At this point, a4architect.com added a further consultant, civil engineer to assist in the design, as per the earlier contract that stated that a4architect.com was to manage the rest of theconsultants involved. At this point, Job Mwangi, the Project Qs is now solidly in the picture and gets copied on every email conversation to enable smooth flow of information.

Feedback from Fusion Capital.
3rd March 2012.

Philippe Kubwimana asks Samson Murithi of Shelter Afrique if there is any feedback from Fusion Capital.

Re confirmation of consultancy agreement.
15th February 2016.

Philippe reconfirmed his commitment on the consultancy service to be provided by a4architect.com.

Fusion Capital Response.

19th March 2012.
Kajuju Kageenu of Fusion capital emailed and assured the team that the project is headed in the right direction.

Value Engineering.

A4architect.com engaged in value engineering to ensure the project cost doesnt shoot up, remaining at the kes 1 billion/rwF 6 billion range.

Investment Certificate.

March 28th 2012.
The RDB finally releases the investment certificate.

Philippe Kubwimana responds to Fusion Capital’s request on cost reduction. He suggests that the neighbouring project doesnt have a high construction cost because the owner is both Architect and Project Manager, so he has reduced consultancy costs.

Philippe informed team that the RDB has asked for the Kigali City planning approval and Bill of Quantities so as to release the investment certificate.

New Financiers.

Samson Murithi of Shelter Afrique informed the team that Fusion Capital, the intended financiers are taking too long and he is commencing discussions with new financiers for the project.

Partial Payment.

16th April 2012.
Philippe Kubwimana agrees into partial payment as a4architect.com assists him to get financing so that the rest of the payment can follow.

A fee of usd 4000 is agreed to enable production of drawings untill financing comes through, where the ealier agreed fee of 4% of construction cost of kes 1 billion/rwF 6 billion will be disbursed.

Contractors.

At this stage, possible contractors come into play, with a4architect.com suggesting Thomas and Piron, a Rwanda and Kenya based contractor that recently completed the Rwanda NSSSF building in Kigali.

Ist National Property Exhibition.

Philippe Kubwimana suggested for a4architect.com and Shelter Afrique to attend the 1st National Property Exhibition in Kigali.

Shelter Afrique Director.
Shelter Afrique Director Architect Femi Adewole confirmed his attendance. Philippe Kubwimana organised for a4architect.com and Quantity Surveyor to be in attendance.

7th June Meeting.
Basil Read, developers from South Africa, who had keen interest in financing the initial Tatu City , Kenya, confirmed attendance.

Minutes.

Qs Job Mwangi took minutes for the meeting.

Awaiting Shelter Afrique design input.
After checking the minutes, Philippe Kubwimana asked Femi Adewole to give his design inputs so that a4architect.com can use them to change the drawings slightly before final detailed approvals at Kigali City.

Shelter Afrique funding.
16th July 2012.

Samson Murithi of Shelter Afrique finally clarifies that the funding through Fusion Capital is not successful, but a new financier, Shelter Afrique, is interested.

360 units in total have deen designed by a4architect.com at this stage.

Contractor redrawing.

Philippe Kubwimana’s contractor redrawing the plans.

Philippe Kubwimana asked a local contractor to redraw the plans .

Hard copy Bills of Quantities.
9th June 2012.

Philippe Kubwimana requested Qs Job Mwangi for a hard copy of his Bills of Quantities.

Kigali Visit.

Samson Murithi visit to Kigali.
September 24, 2012.
Samson Murithi informed Philippe that he will be in Kigali and would like a meeting.

New Design.

Philippe suggests new design after Meeting with Murithi in Kigali.
26th September 2012.

Local Design and Cost Consultancy suggestion.

Philippe Kubwimana suggested that a new local design and costing team after meeting with Samson Murithi in Kigali.

26th September 2012 until October 15th 2015.
Philippe Kubwimana’s Kigali Batsinda Estate anounced a Joint Venture partnership deal with Phatisa, a fund manager firm that manages Shelter Afrique’s Pan African Housing Fund.

http://phatisa.appyourgame.com/wp-content/uploads/2015/11/PAHF-Izuba-City-Deal-Card-2015.pdf

http://www.centuryrwanda.com/news/2015/10/15/phatisas-property-fund-teams-kigali-batsinda-estate

RwF 11 Billion cost from RwF 7 Billion.

The new design, is finally adopted for the Joint Venture project. The previous design by a4architect.com costed kes 1 billion/rwF 7 Billion. This new design costs kes 1.5 billion/rwF 11.3 bilion.
Qs Job Mwangi of Africost is arguably one of the most efficient Quantity Surveyors in East Africa, having a portfolio that includes high rise structures in Nairobi and Westlands CBD, Daystar and KEMU Universities in Nairobi. This means the margin of error in his kes 1 billion estimate is relatively low due to his vast experience in cost control.
http://www.africostkenya.com/portfolio-page/

His 9 West project in Westlands is arguably the most stylish building in Kenya.

http://www.newtimes.co.rw/section/article/2016-02-23/197318/

The previous design had 360 units at a cost of kes 1 billion/rwf 7 billion while the new design has fewer units, 300 units at a higher cost of kes 1.5 billion/rwF 11.3 Billion.

Response in Newspaper Comments.

Potential buyer feedback is crucial in gauging the success of a project.

The new design with higher costs has elicited response from the Kigali public as below in the discussion comments.
http://www.newtimes.co.rw/section/article/2016-02-23/197318/

Projected Profits comparison.

The higher construction costs and fewer units compared to the previous design with lower costs and more units will mean an adjustment to the sales price of the individual units in the long run.

Proffessor Hellen Muga.
March 2012 book about Kigali Batsinda Estate design by a4architect.com.
Cases on the Diffusion and Adoption of Sustainable Development Practices
Helen E. Muga
Helen Muga, Ph.D.: Helen Muga is an Assistant Professor in civil engineering at the University of Mount Union, Alliance, Ohio. She worked as a postdoctoral researcher in the Civil & Environmental Engineering department at the University of South Florida, Tampa, Florida. She received a Ph.D. in Environmental Engineering from Michigan Technological University, Michigan, USA, a Masters degree in Environmental Engineering from Michigan Technological University, Michigan, USA, a Masters degree in Chemical Engineering from Curtin University of Technology, Australia, and a Bachelors degree in Chemistry from the University of Papua New Guinea. Her research interests include water and wastewater engineering, sustainability, life cycle engineering, green engineering, diffusion and adoption of green technology, and international development work.

About her book.
Description
Organizations and businesses are applying sustainable development concepts in their management strategies in order to improve and rethink products, processes, services, and policies which will have significant potential to reduce carbon dioxide emissions, excess consumption, and improve the quality of lives.

Cases on the Diffusion and Adoption of Sustainable Development Practices is a collection of case studies on the concepts and theories of successful sustainable practices. It also identifies key mechanisms and strategies that have allowed the successful diffusion of these practices into communities, regions and nations around the world. This reference source is essential for professionals, researchers, educators and leaders in pursuit of innovative solutions in sustainable development.

Its inspiring to see great minds such as Professor Muga quoting a4architect.com’s works in her booka about sustainable architecture. The aim of publishing is to increase the pool of knowledge so that others can tap into it and make the world a better place to live in.

Conclusion.

Joint Venture financing is a lengthy and time consuming affair. Alot of intellect goes into formulating and shaping the units, designing the units to be affordable and be able to mortgage purchasers into the housing units to give better returns to the investors.
Architectural design that is cost engineered to be efficient and attractive to potential house buyers in terms of affordability and functionality is key to eventual success of a Joint Venture construction project. Studies into successful and unsuccessful projects will give us an insight into how to shape the future of joint venture projects .

Architect Francis Gichui Kamau.
info@a4architect.com