Category: A4architect

Simply log in to your twitter, gmail, yahoo or LinekdIn account then click on the respective button on the a4architect.com website to log in.

https://www.facebook.com/a4architectkenya

African/Swahili

Eg. Allan Donovans house at Kitengela

Swahili Beach hotel at Diani, Mombasa.

African architecture

example. Hon. Mutula Kilonzo house

Tiwi Beach hotel, Mombasa

British/European rustic designs.

Example. Karen Blixen house.

Kihingo village

Windsor park

Modern designs.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

A4ARCHITECT MOTEL AT THOGOTO SOUTHERN BYPASS JUNCTION BUSINESS PLAN

Project: Motel along Southern Bypass at Thogoto junction.

Client: A4ARCHITECT REAL ESTATE INVESTMENTS FORUM

Location: Thogoto town, along Southern Bypass.

Number of Motel rooms. 30

Sale price per Motel room. KES 1,193,916.67

Return on Investment. 5.5 years.

Monthly income expected per share.KES 18,000

JANUARY 11TH 2014

EXECUTIVE SUMMARY
This is a project proposal for the construction of a middle class Motel comprising of 30 No. rooms on a parcel of land situated at Thogoto.
The project has been conceived, designed and will be implemented by www.a4architect.com for Ms a4architect investments ltd.

The estimated development cost for the project is KES 35,817,500.00

The project completion period shall take 12 months from ground breaking to hand over.
Sales for 30 Units @ KES 1,193,916.67 will be in the range of KES 35,817,500.00

Return on Investment shall be in the range of 5.5 years .with Property value appreciation is estimated to be at 50% per annum, meaning the value doubles after every 2 years, due to proximity to the busy Southern Bypass highway , Karen and Thogoto town.

WWW.A4ARCHITECT.COM
A4architect is a dynamic property consulting company specializing in providing a one-stop service for the management and development of a variety of property development projects. It provides its clients, who may be property owners, developers or tenants, with the expertise to guide a project through the complex development process from concept through to building completion.
Depending on the requirements of their client, A4architect can provide a full or partial consulting service. The company’s involvement can vary from sourcing suitable sites, arranging local authority approvals, managing the professional team or providing a complete project management service.
The principals behind the firm have several years experience in designing and managing to completion several projects of various natures .

THE PROJECT
The project comprises the construction of 30 No. Motel rooms each self contained, and a restaurant for Sale at Thogoto Southern Bypass junction on a subdivision measuring just about 0.17 acres.

The overall theme of the development would be one of maximizing on the plot use whilst maintaining reasonable individual privacy within a ‘Green Sustainability’ architecture.

PHASED CONSTRUCTION

In order to ease the impact of the overall cost of the development it is proposed to carry out the construction in phases to be jointly agreed on with the clients.
The 0.17acre plot will have 60 units in total.
The construction will be phased in 4 phases comprising of 15 No. units respectively.

Each of the phases shall be planned to deliver units that are complete and ready for occupation. This will facilitate pre-selling of some of the units prior to the end of construction. This would be achieved through pro-active networking with property managers and use of the internet and social media in particular.
The foregoing will result in further cushioning of the effect of the high cost of financing in Kenya.
In order to enable planning of major infrastructural requirements such as water storage and foul water disposal right from the outset, a master plan of the entire development shall be evolved. Thus the capacity of some of the facilities may initially exceed the needs of the accommodation provided, but this would be done with the full knowledge that the development will grow to fully utilize the facilities provided.

Auxiliary features include:

• Paved walkways .
• 10 car parkings.
• Extra rain-water storage .
• Planted landscaped 24-hr. irrigated gardens.
• Solar power electrical wiring

The country ambience would further be enhanced by having strategically planted palm trees which would serve the added role of acting as wind breaks.

DEVELOPMENT BUDGET
The development budget is as follows:

30 No. motel rooms each measuring 5m by 3.6m.

• The development budget includes professional fees

1.00 Building details
1.10 Type of rooms: 5m by 3.6m self contained room.
1.11 Number of rooms :30
1.12 Number of rooms in each floor :15
1.13 Restaurant
1.14 Office
1.15 Building Cost including External Works and Land: KES 35,817,500.00

2.00 Construction cost breakdown

Total Building works[including Infrastructure& Electric Fencing]-
KES 31,317,500.00

3.Land Cost- [0.17 acres] KES 4,500,000.00

OVERALL PROJECT COST INCLUDING LAND= 35,817,500.00

SALES PROJECTIONS

1.11 Projected sale price per hotel room unit 1,193,916.67

1.12 Overall sales revenue=35,817,500.00

1.14 Gross Return on Investment at Worst case Scenario. 5.5 years

LOCATION

Thogoto Southern Bypass junction is situated 15 minutes drive[25 km] from Nairobi’s Central Business District along Southern Bypass. The site is served by the Southern Bypass, which is an International road linking Mombasa to Rwanda and Uganda. The site of the proposed construction is fronting the Southern Bypass near the cross roads at Thogoto town. See google map below

http://goo.gl/maps/slpIR

The area is connected to the mains water supply from the Kiambu Municipal Council and also has easily connected electricity supply from KPLC.

The immediate locality consists of subdivisions each measuring an eighth of an acre. Developments in this area are predominantly single family residences. The occupancy is predominantly homeowners. With the new construction of the bypass, developments around this area are rapidly transforming into high rise commercial nature.
The majority of the buildings here are of reasonably well constructed and maintained.

MARKET DESCRIPTION

Given the proximity of the site to Nairobi’s CBD, Southern Bypass , Thogoto town, Kikuyu town, Karen, Dagoretti market, the site would realize good returns on a multi level hotel development.

Property appreciation is expected to be in the range of 50%, with value doubling every 2 years.

The planned development intends to maximize this potential by creating accommodation that is spacious whilst at the same time making optimum use of the vertical space available.
At the moment, the closest hotels nearby are located at Kikuyu town,5 km away.

Wida highway motel, located 8km away at Sigona, charges kes 7,000 per night.

We have worked out a 5.5 year Return on Investment based on 60% occupancy at charges of kes 1,000 per night.
This means that the project has potential to increase charges per night from kes 1,000 to kes 7,000, thereby giving Return on Investment within 7 months.

The planned development would meet an existing need since the site is located along the soon to be completed busy highway from Mombasa, Tanzania, Zambia and Southern Africa to Uganda, Rwanda and Central Africa.

COMPETITION
In the locality of the planned development, there exist several properties which are either owned by the residents or are rental properties. The closest competition perhaps comes from the Tamarind Estates which are currently selling at KES 7.5 million per unit. These are however not competitive in terms of pricing since they are priced KES 3.5 Million higher than the Greenville Units.

The other competition is the Great Wall apartments at Mlolongo selling at KES 3.0m which fortunately is 100% sold out and the 360 Apartments[a few meters away] selling at KES 3.5m.

SALES PROJECTIONS
It is planned that marketing the development for sale shall commence before the construction begins.
Consequently it is anticipated that by the time the first floor is completed there shall be an inflow of funds that can either be utilized to start construction of the next phase/second floor.
The sale price for each unit has been set at KES 1,193,916.67 .

This sale price enables potential investors to reap into the high property appreciation rates seen around Nairobi, with potential for doubling the worth every 2 years.

This sale price also enables potential investors to reap into the high Retrun on Investment, set at worst case scenario of 5.5 years with charges of kes 1,000 per night and best case scenario of 7 months with charges at kes 7,000 per night, both at 60% occupancy rate per year.
If the occupancy rate increases, returns will also increase pro rata.

Currently, options available for investors in Kenya with KES 1,193,916.67 are limited to buying land, 1/8th acre , in areas far from Nairobi CBD such as Kajiado, Isinya, Kamulu whereby the lands will not offer monthly sources of income and can only be resold after many years for them to offer considerable returns to the investors.
With the proposed investment in a Motel along Southern Bypass, the KES 1,193,916.67 gives you monthly income and doubles its value every 2 years hence a better investment.

Exit Plan.

In the event the Motel room model does not work out as initially planned, the rooms can be converted into monthly rentable single rooms and the restaurant rented out at market rates.

EXECUTION OF THE PROJECT
A4architect will in this provide the clients with a full design/build service. This shall include

1. Design and specification
Architectural, structural, mechanical and electrical drawings shall be prepared and necessary approvals sought.
During the various stages of the design, the client shall be kept fully informed and client approval sought prior to proceeding to the next stage. The engineering design shall be done by registered engineers under the guidance of A4architect. Detailed specifications shall be developed with close consultation with the client.

2. Project estimates
Subsequent to completion of the design, a Quantity Surveying firm under the guidance of A4architect shall undertake construction cost estimates for the project.

3. Preparation of tender and contract documents
After final design has been done and client approval obtained, tender documents shall be drawn up for the general and specialist contractors. The specialist contract documents shall be prepared with guidance from the relevant engineers.

4. Tendering
Selected contractors shall be invited to tender for the various work packages. We shall then analyze the tenders returned and forward our recommendation to the client.

5. Contract documentation
With the contractors have been selected, we shall draw up the required contract documents and enter into contract with the contractors on the client’s behalf.

6. Project management
Subsequent to the contracts being signed and mobilization to the site, we shall provide superintendence and project management. This will entail ensuring that the project is brought in on time and under budget by constant monitoring of operations on site and remedying any issues that may prevent timely completion or cause expenditure to exceed the budget.

7. Contract administration
We shall handle all matters relating to the various contracts including but not limited to stage payments, performance bonds, extensions of time and relationships between the various trades involved in the project’s execution.

8. Sales and marketing
In conjunction with an estate agency approved by the client, we have produced a presentation package to be used in the marketing of the Motel.

PROJECT TIMELINES
a) Design to Tender
The design to tender process will take a total of 1 month. This will include commissioning of all engineering design, preparation of bills of quantities and obtaining of all relevant approvals for the development.
b) Construction
Construction of the entire project is estimated to take a maximum of 12 months.

MARKETING AND SALES
Marketing of the properties has been planned to start even before ground is broken for the start of the construction. This serves the dual purpose of creating awareness of the availability of quality property for sale and to confirm the validity of the market intelligence.

Already several inquiries have been received from potential buyers .

The internet, mainly Google ads, will be the main marketing tool.
Real estate agencies will be supplied with a virtual presentation kit that includes a walk through movie of the development. A prospectus of the development will also be made for distribution to potential purchasers.

Prepared By
Francis Gichuhi Kamau B.Arch. U.o.N M.A.A.K[A] Registered Architect
www.a4architect.com
+254 721 410684
A4architect.

Nigeria.
The colonial railway was 1.067m wide and currently unuseable.Construction of ta new standard gauge rail that is 1.435m wide is on the process.

1.Abuja-Kaduna.

Length 186km
Cost 874m USD
Cost per Km.kes 422m
Cost per m=kes 422,000.
http://www.railjournal.com/index.php/africa/nigeria-backs-rail-to-boost-economic-growth.html

2.Itkape-Ajaokuta

Single line for iron ore transport.

Length 340km

Cost 211m USD

Cost per km-55.8m KES

Cost per m-kes 55,000

http://www.teamengineering.it/field/transport/transport2/itakpedescrizione.htm

3.Lagos – Ibadan

Double line.

Length 360km
Cost 1.5B USD
Cost per Km.kes 375m
Cost per m=kes 375,000.

East Africa

Kenya-Uganda-Rwanda standard gauge railway. 2014.

Length 2 937 km
Cost US$13·5bn
Cost per Km.kes 413m
Cost per m=kes 413,000.

Kenya. Mombasa to Malaba.

Length 1,100 km . Phase 1 485km
Cost KES 320 Billion
Cost per Km.kes 287m Phase 1. kes 600m per km
source> http://en.ccccltd.cn/newscentre/businessupdate/201210/t20121016_12706.html
Cost per m=kes 287,000.

Ethiopia

1.Adis Ababa to Djibouti

http://www.youtube.com/watch?v=LJmKUctVRl8

Year 2006
The railway is divided into two sections, each with a gauge of one meter and
comprising rails ranging from a low 20 kg/m to 36 kg/m, as outlined below.
The 20 kg/m rails are able to carry traffic with only a maximum axle load of 12
tons, compared to 14 tons for 30 kg/m rails and 17 tons for 36 kg/m rails.

http://www.icafrica.org/fileadmin/documents/Transport_Meeting/S4-Djibouti-Ethiopia_Railway-Final-EN.pdf

Length 781 km
Cost USD 3 Billion
Cost per Km.kes 333m
Cost per m=kes 333,000.

http://www.ft.com/cms/s/0/24bc5ae6-5756-11e3-b615-00144feabdc0.html#axzz2ptihmhMm

http://www.ethioabay.com/2011/10/photo-aurecon-ethiopia-and-china-signed.html

2.Addis to Adama

Length 80 km
Cost US$350 million
Cost per Km.kes 393m

Cost per m=kes 393,000.

http://en.wikipedia.org/wiki/Transport_in_Ethiopia

3.Adis Ababa Light rail

http://www.tigraionline.com/articles/addis-ababa-light-rail.html

Length 35 km
Cost US$475 million
Cost per Km.kes 1.2 Billion

Cost per m=kes 1,200,000.

http://www.youtube.com/watch?v=MjHnxYkjsAo

Francis Gichuhi Kamau, Architect.
info@a4architect.com

The year 2014 has just started.
Current property for sale value in Kenya is still quite high compared to other properties in developed countries such as South Africa and USA.

Check here for Kenya vs South Africa property analysis.

http://www.a4architect.com/2013/07/12/7cost-of-housing-in-kenya-kitengela-vs-south-africa-594/
http://www.a4architect.com/2013/07/12/7cost-of-housing-in-kenya-kitengela-vs-south-africa-594/

Currently, the price of a middle class range house in Rongai,Kiserian, Ruiru,Kitengela et al areas costs around kes 60,000 per m2. This cost includes land, bank interest rates, construction costs and developer profit.

See example for this house for sale at Ruiru for kes 6m. Cost per m2 is kes 60,000.

http://ruiru.olx.co.ke/thika-road-3-bedroom-bungalow-for-sale-ruiru-iid-585119588

This is similar to this bungalow for sale in Kitengela for kes 6m.

http://kitengela.olx.co.ke/bungalows-for-sale-only-3-units-left-iid-585070168

Compare these prices to average prices of houses ofr sale in the USA.

This house below in California, USA, costs kes 69,000 per m2 to buy, inclusive of land, taxes, building costs etc.

http://wasco-california.olx.com/1110-maple-avenue-wasco-ca-93280-kern-county-iid-584679362

This house below in USA costs kes 50,000 per m2 to buy .This is cheaper than most houses for sale in Rongai, Kitengela and other Nairobi middle class suburbs. Same case with South Africa. Kenyan real estate costs much higher for the same quality than in South Africa.

http://wasco-california.olx.com/house-homes-for-sale-3-bed-in-wasco-california-usa-find-wasco-properties-909-cypress-ave-iid-308963754

Infrastructure.

USA infrastructure in terms of security, roads, water, electricity, availability of nearby schools, hospitals,and shopping malls is way higher quality than Kenya s.

Reason for high costs of property in Kenya.

The main reason is that the land costs in Kenya are appreciating at a crazy rate of between 30% and 60% per annum. This huge land rare appreciation in turn leads to high inflation rate which in turn leads to high bank interest rates.

The developers are therefore forced to buy expensive land then borrow expensive money to construct. When these are added together , cost of housing becomes way too expensive.

Land appreciation rate in USA for the last 10 years averages 5%.
http://www.neighborhoodscout.com/ca/cupertino/rates/

Land appreciation in South Africa is also within single digit level.
http://www.globalpropertyguide.com/Africa/South-Africa

In Kenya, the average 30% to 60% is way too high in comparison, meaning , the land price in Kenya is extremely high.

http://www.a4architect.com/2013/06/18/residential-land-price-appreciation-in-kenya-around-nairobi-2000-to-2013/

http://www.a4architect.com/analysis-of-sustainability-of-nairobi-cbd-land-prices-appreciation/

Solution.

Solution to tame this high land price lies in 2 areas.

1.Idle land taxation.
Government can legislate measures to stem this appreciation by implementing idle land taxation.
This will punish land owners who keep land idle hence they will re sell their land to developers hence over supply of land , leading to lower costs.

2. Architectural.
In the event that the Land commission in Kenya is unable to increase the supply of available land through idle land taxation, then constructing vertically on the available pieces of land is a good solution. Developers will have to ensure their buildings rise vertically, several storeys, thereby utilising the vertical space that can be utilised for 4 to 6 levels or even higher depending on the feasibility study.

Vertical rise.
In 2014, we will see more and more storeyed construction in Kenya, particularly in urban areas as land becomes more expensive hence unreachable to developers.
The available land, mostly 1/8th acres, will have to be constructed vertically so as to become economically viable.

This will spawn new businesses that assist in vertical construction, mainly hiring of cranes, scaffolding and form work.

Bank Intrest rates.

As long as the land appreciation rate will continue to be high, this will result to high inflation rate. It will be impossible for bank interest rates to be equal or lower than the inflation rate since this means a loss to the banks.
Currently, inflation rate is on average between 7 to 8%.

This rate is similar/closer to the Central Bank base lending rate which stands at 8.5%.

Home

http://www.tradingeconomics.com/kenya/interest-rate

As long as the most important factor of production ,Land, remains underutilised in Kenya, there will be less production hence higher inflation hence higher bank interest rates hence higher land costs hence high property value.

We are currently witnessing Kenyan banks moving away from construction finance due to high rate of defaulters. This is because property in Kenya is too expensive for lower quality infrastructure compared to other developed countries.

Pooling resources.

Solutions to fund construction in Kenya whereby high cost of land and high interest rate is minimised/removed have been crafted by a4architect.com through the real estate investment forum whereby potential developers come together and pool their savings into one development.
This requires no bank loans and construction can be developed into several storeys, hence remaining competitive.

Investors can visit the forum here and register to discuss with other like minded investors.

http://www.a4architect.com/discuss/

See the real estate investment forum here

http://www.a4architect.com/discus/topic/joint-investment/page/4/

Potential investors are free to join in and reap the benefits of real estate investment in Kenya. With high land prices and high bank interest rates keeping most investors form developing in Kenya, this pooling resources forum will come in to fill in the huge demand gap created.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

The largest cities in most developed countries tend to be located at the coastal region near the sea/ocean.

In Brazil, Sao Paolo and Rio De Jenairo are both located near the coast line/Atlantic.

In USA, Newyork is located at the coast line/Artlantic.

In India, Mumbai is located along the Indian Ocean.
In China, Guanghzou is located along the Pacific ocean.
London is located near the celtic sea/English chanel.
In Russia, St Petersburg is located near the Baltic sea.

With this information, we can assume that coastal cities of Mombasa and Lamu will in the near future increase in population size to surpass Nairobi.

Coastal cities are best situated for international businesses. Lamu town was once a thriving economy between 1 AD and 15 AD.Lamu was an economic hive of activity even before Mombasa. Nairobi is 100 years old, very young, and was created by the British colonists as the administrative capital.

http://en.wikipedia.org/wiki/Lamu

The most natural location for a business capital for East Africa is at Lamu.
Once LAPPSET project kicks in, there will be no turning back for Lamu and i can foresee it growing to be the most populous economic hub for East Africa in future.

Francis Gichuhi Kamau, Architect.

Upmarket office space market in Nairobi is charged at around kes 100 to kes 150 per sq. foot of floor space. This is found around CBD, Upper hill, Westlands, Hurlingham,Ngong road. Basically, 10km radius of Nairobi with the exception of Eastlands.
These buildings are mainly characterised by highly aesthetically appealing and unique building shapes, careful use of finishes ,high quality of workmanship in the builders works, and meticulous property management/repairs/cleanliness/security.

Some buildings within middle class parts of Nairobi usually charge upmarket rates due to the aesthetically appealing designs. Such are common along industrial area/Baricho road whereby one building could be charging kes 100 per sq. foot while the next charges half of this.
Design plays an important role in realising higher rental profits since it attracts more potential clients, creating competition which in turn pushes rent upwards. This is a win win for both the owner/developer and the tenant in that the developer gets higher rents and the tenant is able to retain his customers since his customers perceive him to be better than the competition since his office/shop location is situated at a prestigious address.

A good example of this is seen at Karen shopping centre where 2 buildings next to each other have a very high difference in occupancy rate and rental charges per sq. foot.

This is mostly at 100% occupancy and at higher rent per sq. foot than others next to it.

Upmarket buildings with large expansive floor spaces designed such that partitioning into smaller lettable space is not possible, usually have lower rates of occupancy.

Most tenants usually are seeking to rent on average 500 to 1000 sq ft of space. Within this range, its not easy to find lettable space within the upmarket office space.

New buildings have taken cue of this and are now coming up with designs that are flexible for partitioning into smaller spaces.
A new office block at Westlands along Crossways roads/Waiyaki way has come up with smaller spaces and is usually at 100% occupancy rate.

Demand for smaller spaces within the high end market will increase as we usher in the new year 2014 and will stabilise once developers come up with more flexible designed buildings.

Francis Gichuhi Kamau, Architect.
info@a4architect.com