Author: A4KENYA

Shopping Mall projects in Kenya have been on the increase for the last 15 years.

In Nairobi, we have The Junction Mall, Galleria mall, Westgate Mall, Thika road Mall among others.
In Mombasa, we have Nakumatt and Naivas in Nyali.

Design of shopping malls.
The design has to be such that the anchor tenant, usually a supermarket, gets to enjoy maximum visibility and ease of operation. The location of the car parking should be convenient to the supermarket users.

L and U shapes are the best plan layouts since they give the widest angle of view hence ease of advertising to most tenants. They also ensure that terrorist attacks and sieges are not easy to succeed, compared to the recent situation at Westgate mall which is designed to be enclosed.

Financing.

Careful presentation to the anchor tenants of the design before final local authority approval is necessary. The main anchor tenant, usually a supermarket, should have their input considered in terms of entry point, advertising visibility , access to parking etc.

Other smaller anchor tenants such as Banks, ATMs, shoe companies, hospitals and mobile telephony operators can have their input also before final architectural building plan approvals.

Once these anchor tenants sign agreement to tenancy, then the land owner can proceed to obtain a bank loan to finance the construction.

Architectural design for future expansion.

Since constructing the space for supermarket anchor tenants is not expensive, since its kind of a large hall type building, the land owner should work carefully with their architect to designate space for other new tenants who will be attracted by the anchor tenant.
The anchor tenant’s rental rates can be reduced such that the difference is offset by the new smaller tenants who will be located around the main tenant.

Francis Gichuhi Kamau,Architect.
info@a4architect.com

Buying real estate property in Nairobi, Kenya requires that the buyer acts systematically as explained below.
1. Identify the property and compare market rates.
A buyer one he has identified the property, will need to compare costs with surrounding properties to get an indicative feel of the market rates. For instance, if its a residential house in Runda, checking other comparables either online through sites like Olx or talking to property agents will give an indication of the costs for the area.

There are other more detailed methods for cost comparisons as explained below

https://www.a4architect.com/2014/04/calculate-real-estate-property-value-kenya/

2.Once the buyer is satisfied that the price is ok and they are well prepared with the budget, a technical survey by the architect in conjunction with a structural engineer can be included to ascertain whether the house structure is in order. Real estate transactions are usually to the tune of millions so its important that the buyer ensures his money doesn’t go to waste. Some buildings could be advertised for sale after the owners realized serious structural issues eg the building has unreparable cracks, its sinking to one side or is prone to flooding during rainy season.

Such situations are in most cases repairable once the new buyer works with his architect to provide a solution. The situations can then be used by the buyer to negotiate a lower sale price since the most important part of real estate is not the building, but the land on which the building stands. If the land is in a prime location, its easier for the buyer to work with his architect to come up with solutions to any problems there could be.
Some buildings could have been condemned by the local authority due to flaunting local building by laws and building code. This is a large problem to the property owner but a very small problem to an architect since its very easy to redesign the building to fit within local authority building code as opposed to complete closure as in the case of the mall below in Bangkok.

[youtube https://www.youtube.com/watch?v=a9FpinaXAZo&w=560&h=315]

3. Once the buyer has a complete technical evaluation form his architect, land surveyor and structural engineer, he can then move to a conveyancing lawyer who will then advice on the legal steps to follow for a conveyancing.
If the buyer is not in Kenya, he can appoint someone he trusts in Kenya to hold power of attorney for him. This person can then engage in purchasing the property on his behalf as per Kenyan conveyancing laws.
In most cases, the procedure is such that after the buyer has conducted a search at the respective lands registry to ascertain status of the property, eg whether there are caveats, loans borrowed with property as collateral and name of owner,the buyer can then proceed to pay the seller 10% of the value of the property and undertake to complete the 90% balance within 3 months . The 90% balance is ideally supposed to be put in an escrow account held by his lawyer but in most cases , the buyer keeps the amount to himself until completion of the transaction.

At the point of receipt of the 10% sale price, the seller is to obtain consent to sell from the land board, usually at the area District Commissioner’s office. Once consent is obtained, the buyer or his agent is then to present the consent and the agreement to the respective land registry whereby the lands registrar alters the ownership to reflect the new owner.
After consent to sell is obtained, and signing of the agreement for sale, the buyer can then release the 90% remaining amount to the seller.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

[youtube https://www.youtube.com/watch?v=xhvPwa8TB0k&w=560&h=315]

Tarmac road cost per km varies from the kes 20 million per km used in Governor Alfred Mutua’s Machakos county roads to over kes 300 million per km used in Thika super highway and Southern Bypass roads in Nairobi.
The thickness of the tarmac/top layer/asphatic concrete is determined by the traffic envisaged. For heavy traffic eg super highways, the tarmac is thicker.

Dr Alfred Mutua managed to use kes 650 milllion to tarmac 33 km of road. Thika road, designed for heavier traffic, costed kes 31 billion for 50 km of road. This translates to kes 620 million per km which can be broken into 2 since it has 4 lanes hence around kes 300m per km.

The Southern bypass road,also designed for heavier traffic, with 28km of main carriageway and 22km of service roads, totals 50km at a cost of kes 17 billion. This works out to kes 300 million per km.

Machakos County roads.

Machakos county, through use of British standard as compared to the American/Chinese Standard of road construction where the base and sub base are made of stabilized soil has managed to achieve full construction at a very low cost, though the bitumen cover will need to be increased over time to at least 50mm thick compared to what looks like 20mm thick cover from the pictures.

Thika and Southern Bypasses are using American/Chinese standards of road construction where there has been allot of back fill, cutting into hills, filling up valleys and lifting of the road surface high from ground level.

This excessive lifting makes the roads expensive and also reduce the road interaction with businesses at the sides of the roads. In future, these highway designs need to involve the locals so that their needs such as ease of access and ease of customers manouvering their cars to buy goods off the roads are considered. Thika road design was done by Indian consulting engineering firms which should have designed the road such that it offers easy access to businesses and residences along the road side.

Users are forced to stay on the road, hence little access to roadside shops. This leaves the communities where the road is passing without the much needed economic ingredient benefit from the road.
This excessive lifting also necessitates for expensive service roads for road side access. This cost for service roads could have been used to lay more tarmac to inaccessible areas. Eg the Southern Bypass has 30km of main highway carriageway and 20km of service roads since plots next to the roads cant use the highway due to its high level from the ground.

The 30km highway could have been designed similar to the Machakos county roads whereby its easy for vehicular access to the road side hence saving on the 20km used for access road.

Architectural point of view.

Governor Mutua’s Machakos roads, from an architectural point of view ,built using British standards, offer better interaction betwen road users and businesses at the road sides than the Thika superhighway and Southern Bypass roads, built using American/Chinese standards of soil stabilization because of the below.

1. Less excavation and back filling hence lesser costs.
2. Easy for vehicles to pull over the road side hence economic boost to communities living along the road side.

Disadvantages.

The American/Chinese standard of road construction as utilized in Thika superhighway and southern bypass is relatively new worldwide, not more than 20 years in use. Use of stabilized soil to support a road and lifting of the road surface high away from ground level, probably to protect it from water could be a better way of protecting tarmac from water , which erodes tarmac easily.

Going forward.

County roads should embrace stabilised soil road base construction similar to Thika road and Southern bypass road construction. The design can be done such that it allows for the road to interact and offer easy access to lands next to the road for ease of economic empowerment of the communities living and doing business by the road sides.
With stabilised soil bases, a thinner layer of bitumen cover can be used or concrete bamburi blocks laid on top as the cover. This will go a long way to ensure locally produced building materials are used in Kenya, creating employment to many.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

Land % to total construction cost.

How much does land contribute to the real estate sector?

Land contributes between 10% to 50% of the total const of a project in Kenya.

Land where the project is low-rise such as bungalow or maisonette works out at between 25% to 50% of the cost of construction.
In upmarket areas such as Karen, Runda, where there is a restriction on land size to 0.5 acre for only 1 house, land works out to 50% of the cost.
In middle class areas where bungalow construction is the norm such as Kitengela and Rongai, land works out to 35% of the cost of construction.

In Nairobi CBD where buildings are on average 10 floors high, land works out to 15% of the total construction cost.
In middle class areas where flats/apartments are constructed eg Rongai, land works out to 20% of the total const of construction.

In short, people who have constructed several storeys high do not feel the effect of high land price.

Energy.

How can the contribution of energy be quantified in the real estate sector?

Energy contribution in real estate is mainly used in heating bathroom water, cooking, lighting, electronics such as TV,Fridge etc.
With solar power panels becoming cheaper, cost of energy in residential houses can be reduced through use of solar power for heating and lighting purposes. Other countries such as Germany have very high use of solar power, nearly 74% of energy generated by wind and solar.
Solar power installation is expensive in the storage part where a huge battery capacity is needed. Countries such as Germany have a system whereby solar power generated during the day by houses is distributed through the electricity network which subtracts at the electricity meter and then the house uses normal power at night which cancels out at the meter.

Kenya should study the German model carefully and follow it so as to achieve the same results, more so because Kenya, being on the equator, gets more solar energy from the Sun than Germany.

Taxation.

Possible revenues from VAT on commercial property.

Rental income tax is charged on commercial property in Kenya.
The effect of this tax is an increase in rent since land lords simply add on the tax to new tenants. This increases the cost of living, resulting in high inflation hence lower productivity hence a poorer economy.

Land Value taxation/idle land taxation, same as implemented in South Africa, USA, South Korea and Denmark, is much better since it works in a win win situation for the economy. Land Value taxation ensures land owners build and utilise their lands to the maximum so as to afford the tax. In the process, this creates employment whereby land owners need to hire labour to plan if on agricultural land, or build if on urban land, hence reducing unemployment.

Possible revenue generation from landlords rental income.

Revenue generation from rental income tax will in the long run cause higher rents which in turn cause less productivity which in turn cause a poorer economy since the tenants will be over burdened by the tax hence unable to produce more.

Steel.

How much does steel and iron products contribute to the overall construction costs?

Steel is used mainly in concrete reinforcement works for high-rise storied buildings. In Kenya, structural designs are mostly to the British standard, which specifies concrete and steel for structural support eg slabs, beams, columns.

Reinforced concrete uses less steel hence the overall const of steel not much. In American/Chinese standards, steel is used as structural support for beams .columns and slabs eg in Pre engineered buildings coming up in Nairobi eg next to Mutula Kilonzoo advocates along Ngong road and near Yaya centre in Hurlingham.

Steel is also used to construct window frames , security grills and doors.
Francis Gichuhi Kamau, Architect.
info@a4architect.com