Category: A4architect

KENYA REAL ESTATE 2012. FUTURE OF 2013.

LAND.
The year 2012 has seen unprecedented high land values around Nairobi. Land in upper hill shot up from
KES 200m per acre to the current KES 350m , representing 75% increase in land value.
Land in Nairobi Suburbs such as Syokimau 1 KM from Mombasa road shot up from KES 1.5m per 1/8th acre to KES 2.2 m for the same, representing 46% increase in value.
This increase in value has had an advantage to the minority land owners and a disadvantage to the majority land buyers who have had to cough up much more.
The main reason for the increase in land value is due to normal increase in population while available land for sale remaining constant and influx of cash from overseas into the Kenyan economy.
This high cost of land has resulted to high cost of houses even though the construction materials prices have not risen much in the last 5 years.

BUILDING MATERIALS.

New cost effective building materials have been introduced to the Kenyan market.

Mazeras stone tiles.
Even though Mazeras stone has been in Kenya still time immemorial, it was only used in the Coast and a few high end shopping malls such as the Village Market.
With its cutting into square and rectangular pieces, it has become a popular wall and floor finish due to its relative affordability, high aesthetics ,high strength and low maintenance cost.

Aluminum Window and Door frames.
With the onset of Chinese Aluminum shops setting business in Nairobi, Aluminum windows and doors have now been introduced to the mass market due to their affordability and high aesthetics.
Previously, Aluminum windows and sliding doors were the preserve of very high cost buildings. Currently, most flea markets and shop partitions are done using Aluminum sections. We are now witnessing Aluminum partitions in residential units especially the Master bedroom bathroom partitions.

MDF and HDF Boards.
MDF Boards have started to edge out block boards as the main wardrobe ,kitchen cabinet and furniture materials. HDF Floor boards have also become common place in the floor finishes sector.

LOWS OF 2012.

2012 has witnessed a collapse of Buildings such as the Westlands and Mlolongo buildings .
The Government through Ministry of Local Government which is responsible for ensuring building safety have improved the level of inspections since its quite a long time since we have heard of a building collapsing of late.

FUTURE OF 2013.

Land Laws.
The new Land Laws whereby the Land Commission will regulate size of individual land ownership and propose land tax will be a game changer in 2013. Solutions such as Idle land taxation if implemented will result in large land owners selling their land hence reduction of land prices due to oversupply. Idle land taxation will also increase revenue to Government hence more infrastructure such as roads and water supply improvement.

New Building Materials.
Prefabrication and new building materials into the market will change the look of new buildings. Panelized housing such as the ones being produced by NHC will redefine how the shape of new buildings will look.
Flexible curveable building materials such as uPVC ceiling, Onduline roofing sheets and profiled steel sheets will redefine the shape of the house as we know it. There will be more and more curvilinear house styles as house owners seek to quench their thirst for unique housing.

Francis Gichuhi Kamau. Architect.
www.a4architect.com.
info@a4architect.com

MYTHS IN BUYING AND SELLING PROPERTY IN KENYA.

Myth No. 1.

Assumption that large Property Agents always have the latest portfolio of new property.

Large property Selling firms always have any new properties emerging for sale into the market.
Some people believe that large Property Agency firms have a portfolio of any new property in the market. This may result in people giving up if the large Property firms tell them that their desired property is not available in the market.

The best source of information for new property up for sale is in small time Agents and individual brokers. These usually get the information faster than the Larger Property firms. For instance, an individual or corporate body could be looking to buy an acre of land in Upper Hill . Their first point of reference will be in the 5 largest property Agencies. The highest chance is that these agencies will not have such land for sale. The individual or corporate will then believe that such a property is not available. If they were to also contact small agencies for the same, they would be surprised at the number of acres available for sale in the same region.

Myth No. 2.

Assumption that the Local Authority has approved the property construction.

People assume that once they buy a building after following due diligence, there can be no other risks pertaining to the property. There is a possibility of buying a building that has been condemned by the Local Authority for various reasons. Maybe the owner did not seek the Local Authority approvals while constructing . In such a scenario, maybe he or she constructed without adhering to Bye laws such as observation of building line setback or ground coverage. Such situations are remedied by demolition. The new owner will be surprised when the Local Authority come calling asking him or her to demolish.

Myth No. 3.

Assumption that property is always structurally sound.

People assume that once they buy a building, structural defects can not affect them.
Its quite common these days to meet people who bought houses then the walls and floors begin to crack soon after occupation. This results in complex legal arguments as to who is responsible. With the onset of the new Construction laws in Kenya, Building contractors for private houses will now be required to be registered by the Government hence ease of regulating them. Before this law, only Contractors doing Government works were required to be registered. This will assist the property owners to trace the contractors when such defects occur. The Best Practice internationally is that the contractor gives a 6 months warranty period for patent defects such as leaking roofs, blocked pipes, broken door frames and handles e.t.c. For Latent defects such as structural cracks, falling walls and roofs, sinking foundations e.t.c, the Best Practice is a 6 year liability period. Now with the current laws, it will be easier for property owners to have a recourse once such defects happen.

Myth No. 4.

Assumption that buildings last forever.

Buildings have a lifespan, usually 50 years depending on the type of materials used to construct.
Some people have bought buildings without carefully analyzing the materials. It’s possible to buy a building then discover that the walls are made of soil blocks hence a very short lifespan. It’s also possible to buy a building then discover that the roof trusses have all been eaten up by ants hence a very short roof lifespan. When buying a property, careful analysis as to the costs of renovation is important to avoid situations where you buy the property at a premium only for you to redo the whole complete house all over again.

Francis Gichuhi Kamau. Architect.
0721410684
info@a4architect.com

DiSCUS Pre Engineered Steel Buildings [PEB] Pre Engineered Steel Buildings [PEB], their availability and extent of use in kenya

Cost Item Kshs %
Land 120,000,000.00 19
Preliminary 10,000,000.00 2
Construction 400,000,000.00 62
External Works 20,000,000.00 3
Contingency 8,000,000.00 1
Professional fees 32,000,000.00 5
Project Management fees 8,000,000.00 1
Transaction Advisory fees 8,000,000.00 1
Marketing 4,200,000.00 1
Financial Charges[8% of construction cost depending on financiers] 32,000,000.00 5
Total 642,200,000.00 100

Financing Plan Kshs %
Developer[Land,50%Transaction Advisory,70%Professional & Project Management fees, 50% marketing fees] 154,100,000.00 24
Equity Provider 154,100,000.00 24
Debt Finance 317,200,000.00 49
Presales 16,800,000.00 3
Total 642,200,000.00 100

PROFIT
TOTAL SALES FOR 5000 M2 800,000,000.00
TOTAL EXPENDITURE 642,200,000.00

NET PROFIT 157,800,000.00

% Profit Margin 24.57178449

NAIROBI PROPERTY VALUES Q and A.

1. Some houses are fetching up to between Sh110m and Sh200m, do you know a more expensive residential house in Kenya?
The price of a house is mainly dictated by the price of the land it sits on.
Currently, 1 acre of land in Gigiri near the UN Complex is going for KES 150m. Add the cost of construction, say KES 40m. This brings the value to KES 190m. Some residential houses in upper hill area where an acre of land is going for KES 300m will cost over 300m. Buyers of such property usually demolish to pave way for high rise developments that can utilize ground plus several other floor levels.

2. Which areas are houses generally expensive and why?
Muthaiga, Gigiri and Upper hill. This is because the areas have perfect city council zoning controls and services and are in close proximity to UN, USA and British High commissions.
3. What type of people usually buy such houses?
International bodies such as countries for their ambassadorial residences. NGOs affiliated to UN and World Bank.
4. Considering Kenya’s GDP, what makes some houses in Kenya so expensive?
Presence of UN complex and Kenya’s geographical position in relation to mineral exploitation in the larger East Africa region.
5. Does a buyer of a home worth Sh200 million in Kenya get value for his/her money?
For the International organizations, it makes business sense. The occupants will not have to travel far from their places of work, mainly, USA Embassy, UN Complex, Israeli Embassy and British High Commission. The occupants also feel safe and secure in this era of terrorism.
6. There are people who argue that most Kenyans are moving from paying rent to paying extortion fee (servicing outrageous mortgages). What is your take?
The mortgage rates in Kenya are quite high. The construction costs are relatively constant and for the last 5 years , have not increased by a large margin. On the other side, the land prices have increased by very high margins during the same period. This has resulted to very high house costs.

A simple calculation before buying a house can enable a buyer to project the advantages. For example, if someone bought a 3 bedroomed flat in Kileleshwa 5 years ago for KES 10m and 20% interest rate for 10 years, the monthly bank payments will be KES 200k.
They will have paid a total of KES 200k x 12months x 10 years = KES 24m.
The property appreciation rate on average for Nairobi is 20% per year. This means that after 10 years, the property will be valued at KES 30m. They will have made a net capital gain of KES 6m.
This shows that the mortgages are working well for people who will care to do simple capital gains calculations. The calculations could give negative capital gains for properties which are not appreciating at a high rate.

Architect Francis Gichuhi Kamau.
http://www.a4architect.com
+254721410684.

Real estate investment is one of the most popular investment options, other than stock and forex trading and investment. In fact, many high profile investors, and billionaires, and the market watchers are of the view that it is better and safe to invest in the real estate and the market. This is because, both stock and forex investments are much more complex, and involves risks at various levels.

Real estate investment options

There are various ways through which you can invest in the real estate market. The primary stages are very simple, and are not as risky as the forex or stock investments. So, the different real estate investment options are:

1. Rental: If you are having problems with making the mortgage payments as you are also required to manage, all of the other types of home and the maintenance costs, renting out your property can be a good option. This is in fact, you may be able to earn through the rent in a continuous rent from the tenants. So, you may be able to make your mortgage and your house too, through the money earned in the form of the rent. This is also going to help you with the capital appreciation, if the property value improves over the time. However, you will have to give sufficient effort with regards to this, and have enough patience too.

2. Trading: Under the trading option, you will be required to buy properties and resell those within short time span. You may be able to make huge profits through this option. This trading process is commonly known as flipping – of the properties. If possible, you can buy the undervalued properties and get to sale these at a little more high cost. You won’t be required to invest any more money with regards to the development of real estate property. However, this option is a bit more complex than the previous type.

The other two options are working with the investment groups, and REIT or the Real Estate Investment Groups.

Pros of real estate investment

Some of the pros of real estate investment are:

Tangible assets: If you invest in the real estate, you may be able to see that this option is more tangible. This is because, you are able to see the property you are actually investing in.

Tax benefits: You may be able to claim the deductions with regards to you tax returns like, the amount paid towards the maintenance of your property and also the cost of the loan, and also the charges of the agents and so on.

The long term benefit: the rental price is ever increasing, thus is a good option with regards to the long term investments.

Cons of real estate investment

There are various cons of real estate investment too, and these are:

No high liquidity: If required to sell off, you may have to do that at a low price.

Bad tenants: You may be required to deal with really bad tenants.

The ongoing cost: You will have to bear all kind of maintenance costs.

So, these are the pros and cons of real estate investment. You will have to weigh these, in order to decide, if you should at all invest in the same.

Am looking for residential plot for sale- 1/8th or1/4 at Syokimau preferably with entry through the JKIA resort club. Will appreciate your feedback.

 

Hills 01.
Plinth Area: 100m2.
Cost:
High Cost finishes:KES 3.5m[USD 400,000]
Middle Cost finishes:KES 2.5m[USD 30,000]
Low Cost finishes: KES 2.0m[USD 23,000]
Bedrooms:3

Hills 02.

Plinth Area: 100m2.
Cost:
High Cost finishes:KES 3.5m[USD 400,000]
Middle Cost finishes:KES 2.5m[USD 30,000]
Low Cost finishes: KES 2.0m[USD 23,000]
Bedrooms:3

Rongai House.

Plinth Area: 100m2.
Cost:
High Cost finishes:KES 3.5m[USD 400,000]
Middle Cost finishes:KES 2.5m[USD 30,000]
Low Cost finishes: KES 2.0m[USD 23,000]
Bedrooms:3

Syokimau 01.

Cost:
High Cost finishes:KES 3.5m[USD 400,000]
Middle Cost finishes:KES 2.5m[USD 30,000]
Low Cost finishes: KES 2.0m[USD 23,000]
Bedrooms:3

Kirinyaga House.

Cost:
High Cost finishes:KES 6.0m[USD 700,000]
Middle Cost finishes:KES 4.3m[USD 50,000]
Low Cost finishes: KES 3.4m[USD 40,000]
Bedrooms:4

WHY THE MLOLONGO BUILDING COLLAPSED.

http://www.trust.org/resize_image?path=/dotAsset/5819b229-dffd-47ca-8f2e-aaf1d14e2aa9.jpg&w=649

A six storey building collapsed in Kenya,Nairobi,Mlolongo town on Saturday  9^th June 2012 at around 6pm.

I have conducted personal research on the collapse of the previous  buildings collapse  in Nairobi as in the links below.

Langata Southern Bypass opposite Carnivore-2011

http://www.a4architect.com/topic/why-the-langata-southern-bypass-carnivore-building-collapsed/

 

Nairobi Kasarani Building-February 2012.

http://www.a4architect.com/topic/why-the-mwikikasarani-building-collapsed-and-how-to-prevent-this/

 

The primary reason for the Langata building collapse was because of use of poor quality sand for the beams and columns.

The primary reason for the Kasarani building collapse was use of very large spans between the beams and columns, resulting in weakness.

Similarities.

All the 3 buildings collapsed when the topmost floor was being constructed at the time of hoisting cement, sand and ballast for mixing.

The point localized weight of the cement, sand, ballast and water, coupled with the added force of the machine hoist that tends to pull the building at an angle during hoisting, is in my opinion the cause of the collapse in all the 3 buildings which I personally visited.

Mlolongo building.

The foundation and surrounding foundations of other upcoming buildings next to the Mlolongo building was filled with water.

The type of foundation used was not suitable for an areas filled with water. The size of the columns, aprox. 250mm by 250mm in my opinion could not enable water-proofing hence easier for water to reach the steel members inside the concrete hence rust resulting to breakage.

During concrete mixing, when too much sand, cement, water and ballast was heaped at the top floor, the basement columns could have given in since the steel was eaten by rust from the swampy ground.

Also, the size of the suspended slabs was unusually thick-approx.200mm instead of a maximum of 150mm. This seemingly small difference of 5cm when quantified in tones represents hundreds of tones of added weight. With a weak basement structure, this weight was too much when added to the extra localized weight from the cement, sand and ballast being hoisted upwards.

Now that all the 3 buildings collapsed during hoisting of materials , it’s important for builders to note that their buildings have a high chance to collapse during this period so they should take precautions.

How to prevent this trend of buildings collapsing.

 

The responsibility to ensure buildings are safe rests squarely with the Ministry of Local Government.

It’s the work of the Ministry of Local Government to ensure that all buildings have their designs done by registered Architects and Structural engineers. In this case, the Ministry of Local Government could have ensured that the Mlolongo, Langata and Kasarani buildings submit architectural and structural drawings to them for checking. This way, when too much weight was added, the buildings could have been able to support this.

It’s the work of the Ministry of Local Government to ensure that once the design is approved, the works are supervised as per the approved drawings.

At the moment, Architects are asked to absolve the Ministry of Local Government of liabilities in case buildings collapse .This is done at the time for application for building permit.

In my opinion, I find this improper in that the architects don’t have the capacity to enforce such a role .If the building owner decides not to involve the architects, all he needs to do is not to pay the architect/engineer for his time and transport to supervise-this ensures the architect will not be able to visit the site since he can’t do this at his own personal cost.

Also, even if the architect/engineer managed to visit the site and instructed the contractor/owner to use materials as in the drawings, the architect/engineer doesn’t have mechanisms to ensure the instructions are followed. These mechanisms are within the Local Government e.g. City Court, City Askaris e.t.c who are paid by the tax payer to enforce this.

How Local Government can ensure compliance.

Local Government Engineers are few/scarce. To enable the few to work at optimum levels, an IT solution is needed. This will enable just one engineer sitting behind a computer to supervise hundreds of buildings in conjunction with practicing architects /engineers using tools such as internet, and Google earth.

I had a meeting with the PS Ministry of Local Government 2 to 3 months ago, on such a portal that I have developed. The Ministry of Local Government technical teams evaluated the portal and were ok with it.

See how the portal works at the below link

www.a4architect.com/submit-drawings/

The PS recommended that I ask individual Local Authorities to buy into the idea. Any Local Authority interested in implementing this can contact www.a4architect.com for the teamwork.

Conclusion.

Collapse of buildings in Kenya can be prevented. Local Authorities can utilize IT/internet tools such as www.a4architect.com/submit-drawings/ to work with minimum specialized labour force. With such a tool, Local Authority engineers could have seen the Kasarani building exec structural spans and advised on it online. With such a tool, Local Authority engineers could have seen the report on the type of sand being used at Langata and advised appropriately online.

With such a tool, local authority engineers could have seen the swampy grounds at Mlolongo , small sized columns and excessively sized  slabs from images uploaded to the portal by the engineer and advised/enforced appropriately, all from the comfort of their offices.

The responsibility to ensure safety of buildings remains within the Ministry of Local Government and is the same in all countries worldwide. Unless the Ministry of Local Government acts, more and more buildings will continue to collapse.

Architect Francis Gichuhi Kamau.

Registered Architect.

info@a4architect.com

www.a4architect.com