Category: A4architect

Steel.

In January 2022, President Uhuru Kenyatta banned trading in scrap metal. This affected local steel producing companies hence steel prices doubled . Rebar size D8 sold for kes 550 per bar in January. In March, the price has nearly doubled to kes 950 . Prices should come down if President Uhuru Kenyatta rescinds the decision to ban scrap metal dealings.

Cement.

Simba Cement, which is the largest producer of cement in Kenya after acquisition of Athi River Mining cement company, produces 2.7million tons per year followed by Bamburi cement at 2.1million tons per year.

Simba cement produces its cement clinker locally while the rest of the competition, Bamburi, Savannah, EAPL import clinker. The importation of clinker has been affected by the covid pandemic situation where there are shipping delays internationally hence the shortage of cement currently being witnessed.

Simba cement production has been slowed down by the huge import of clinker by Savannah, Bamburi and EAPortland cement companies. https://www.kahawatungu.com/national-cement-company-sacks-860-employees-emali-factory/

This imbalance has resulted to the current cement shortages whereby cement price has jumped from a low of kes 500 per bag in January 2022 to current March 2022 prices of kes 700 per bag.

These problems will cease once the Kenya Government Ministry of Trade comes in to help resolve the cement wars.

Devki

Coincidentally, both Simba Cement and Devki steel are the leading cement and steel producers in Kenya and owned by Narendra Raval.

Architect Francis Gichuhi Kamau.

0721410684

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Call 0721410684. gichuhi@a4architect.com

This pattern is made using a patterned R 8 or R 10 reinforcement bar shaped with a handle which the fundi uses on the wall to make the pattern.

Architect Francis Gichuhi Kamau.

0721410684

 

 

 

 

 

 

 

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

Apartment block rental prices in Kenya differ from location to location. The main factor that affects the rental price is location from CBD , Nairobi. CBD Nairobi is measured from the epicenter of Corner house , radiating all the way to the extents of the country in mombasa, Kisumu, Turkana, Marsabit.

From this epicentre, prices decrease the further away you move, with small variations as you approach cities eg Nakuru, Nyeri etc where the prices get new epicentres.

% CHANGE

Lets calculate the % change of rental price from an arbitrary plot in Kileleshwa compared to an arbitrary plot in Ongata Rongai. The Kileleshwa price per acre is kes 200,000,000. Price per m2=kes 50,000. An average 2 bedroomed house is say 80m2 in plinth area so land value in Kileleshwa will be kes 4m.

The Ongata Rongai land costs kes 10m for a 1/4 acre. Price per m2=kes 10,000,000/1000=kes 10,000.

The 2bedroomed house plinth area of 80m2 will cost kes kes 800,000 in land value.

The % change in land values will be 500%.

Rent differential.

The Kileleshwa 2 bedroomed house rental income is kes 60,000 per month. This will pay back the land value in 6 years.

The Ongata Rongai House rental income is kes 20,000 per month. This will pay back its land value in 3 years.

High Rise.

The ileleshwa apartment will need to be very many floors in design so as to be economically viable.

The Ongata Rongai house will pay its land value back faster than the Kileleshwa house assuming they are all built on the same levels.

Conclusion.

Land in Middle cost areas of Nairobi would give better returns for residential apartments compared to land in high end areas. This is on the assumption that construction costs and architectural designs will remain the same in both scenarios. Generally, construction costs for high end areas are higher than for middle end areas.

Architect Francis Gichuhi Kamau.

gichuhi@a4architet.com

0721410684

The year 2021 has only 3 days left before it ends. This year has ben dominated by the COVID economy which affected large parts of the global economy. Surprisingly, the year 2021 has seen lots of activity in the construction industry in Kenya, mainly the low and medium level segments in the outskirts of the city.

Areas around the city periphery have had shortages of fundis, specialized kill labourers, carpenters, masons etc due to the unprecedented high demand. Most middle class Kenyans embarked on land acquisition and construction of owner occupier houses. his resulted in a boom for hardware and construction material suppliers .

The high end segment , high rise office and hotel blocks around Upper Hill, Westlands etc had a slow down. Global Trade Centre, GTC Building, which as recently launched by President Kenyatta, was started in 2014, 7 years ago. The 42 floor building that houses JW Marriott hotel among other businesses is amongst the new buildings to dot the Nairobi high end real estate skyline. Newer projects of this magnitude have become fewer during the COVID period. Most new projects are within the middle to low segments eg bungalows, apartment blocks et in the outskirts of the city.

OMICRON.

With the onset of the Omicron variant, scientists , virologists are predicting the end of the pandemic, with this new variant being less fatal. This could predict the return to normalcy on the global economy scene which will open up the country for foreign investors to come in and develop these high end building projects such as GTC.

TECHNOLOGY.

Prefab technology which was very active a few years ago didnt get much inroads into 2021. Major prefab wall suppliers were less visible this year, with minimal advertising. Steel structure Pre Engineered Building systems were quite active, with the AAR Hospital along Kiambu road incorporating the steel structure support for the front wall facade.

2022 PREDICTIONS.

The hold back in the high end segment of the real estate industry will create a flood as developers rush to fill the gap that had been left by the COVID economy slow down. The middle and low ends of the construction segment will witness a slow down as people go back to renting as opposed to owning their own houses once COVID pandemic is through next year.

Construction industry is very slow to adopt new construction technology unlike say the electronic industry. The way we constructed houses 100 years ago is pretty much more or less the same way we mainly construct now. Next year is predicted to still reman the same, like 95% of buildings will be constructed in the normal traditional stone and mortar way , with a few developers experimenting with new construction technologies.

Architect Francis Gichuhi Kamau

gichuhi@a4architect.com

0721410684