Category: Uncategorized

Real Estate Investment opportunities in Kenya. Hostels.

Real Estate investment opportunities in Kenya can be found in residential for sale, residential for rent, hotels, hostels, learning institutions, homes for the aged, hospitals, offices for sale, offices for rent among others.

Hostels are bedsitter like type of rooms built near Universities and colleges for student accommodation. The students share a 3.5 m by 4m room . In most cases in Kenya, the sharing per room is done by 2 people.

Most hostels tend to separate men from women . Food is served in a common dining area near the Kitchen.

The average rent per student per month is between kes 2,000 and kes 3,000 sharing 2 students of the same sex per room. As society becomes more liberalized, decisions regarding same sex sharing will most probably be reconsidered.

In most hostels serving Kenyatta University in Juja, the rooms are self contained, with a toilet and shower. A few hostels have communal showers but the rent is quite low compared to self contained hostels.

There is an administration office that is manned 24 hrs within the hostel so as to address the various issues facing the students.

Return on Investment.

Cost Item	Kshs	%
Land	1,000,000.00	3.926033528
Preliminary	120,000.00	0.471124023
Construction	19,200,000.00	75.37984374
External Works	441,600.00	1.733736406
Contingency	288,000.00	1.130697656
Professional fees	768,000.00	3.01519375
Project Management fees	192,000.00	0.753798437
Marketing	5,400.00	0.021200581
Financial Charges	3,456,000.00	13.56837187
Total	25,471,000.00	100
Financing Plan	Kshs	%
Developer	6,271,000.00	24.62015626
	0.00	0
Debt Finance	19,200,000.00	75.37984374
Presales	0.00	0
Total	25,471,000.00	100
PROFIT
TOTAL RENT FOR 48 UNITS	3,456,000.00
TOTAL EXPENDITURE	25,471,000.00
REPAYMENT PERIOD	7.37

 

In an area where a 1/8th acre costs kes 1m, this can have 48 rooms each rented at kes 6,000 per month or kes 3,000 sharing . The return on investment for this type of investment is 7.3 years which is impressive considering most investments return within 10 to 15 years.

 

Francis Gichuhi Kamau, Architect.

info@a4architect.com

0721410684

FEASIBILITY STUDY FOR HIGHRISE HOUSING IN PANGANI, NAIROBI ON A 0.25 ACRE PLOT.

Land Cost.

 

A 0.25 acre plot in Pangani costs around KES 50m.

A maximum of 10 floor levels is possible, similar to the Chinese 10 floor building opposite thwe Pangani Mosque.

 

Car Parking.

 

This can park 28 cars per underground level. For 2 underground levels, this will park 56 cars.

Assuming a 3 bedroomed unit of 90m2, the building can house 6 units per floor and 60 units for the maximum possible 10 floor levels.

This number of units fits well with 2 underground levels of car parking. The extra cars will park along the street.

 

Construction cost.

 

A construction cost per m2 of KES 43,000 is envisioned to cater for the underground plus high rise costly construction costs.

The building construction will cost kes 230m. The total construction cost when you add up the building cost, road works, fence, sewer, professional fees,marketing, land and bank interest will total approximately kes 360m as tabulated below.

 

Return on Investment.

 

This gives a 25% Return on Investment if the houses are sold at KES 7,500,000 each, which is within market rate.

Property appreciates over time. The construction period can take a minimum of 1 year of which the property value will have increased at a rate of 20% per annum.

Below are the calculations that support the above .

Cost Item	Kshs	%
Land	50,000,000.00	13.82521609
Preliminary	1,800,000.00	0.497707779
Construction	226,800,000.00	62.71118018
External Works	11,340,000.00	3.135559009
Contingency	4,536,000.00	1.254223604
Professional fees	11,340,000.00	3.135559009
Project Management fees	2,268,000.00	0.627111802
Marketing	12,750,000.00	3.525430102
Financial Charges	40,824,000.00	11.28801243
Total	361,658,000.00	100
Financing Plan	Kshs	%
Developer	134,858,000.00	37.28881982
Debt Finance	226,800,000.00	62.71118018
Presales	45,000,000.00	12.44269448
Total	361,658,000.00	112.4426945
PROFIT
TOTAL SALES FOR 60 UNITS	450,000,000.00
TOTAL EXPENDITURE	361,658,000.00
NET PROFIT	88,342,000.00
% Profit Margin	24.42694479
Take home ammount.	138,342,000.00

 

 

Francis Gichuhi Kamau. Architect.

info@a4architect.com

0721410684

NAKURU 1 ACRE FOR SALE OPPOSITE STATE HOUSE.

This 1 acre land for sale is located in a prime area of Nakuru town directly opposite Nakuru State House.

Here is a link the the google map https://maps.google.com/maps/ms?msid=205617053586273466800.0004dd1fc97f0b9bb2d1f&msa=0&ll=-0.285043,36.083114&spn=0.005407,0.010203

This land can be developed to a number of commercial usages such as hotel, shopping mall or offices.

Return on Investment as Hotel.

If developed into a hotel, the returns will be  as below.

Cost Item	Kshs	%
Land	57,000,000.00	14.7429299
Preliminary	1,800,000.00	0.46556621
Construction	249,600,000.00	64.5585139
External Works	12,480,000.00	3.2279257
Contingency	4,992,000.00	1.29117028
Professional fees	12,480,000.00	3.2279257
Project Management fees	2,496,000.00	0.64558514
Marketing	850,000.00	0.21985071
Financial Charges	44,928,000.00	11.6205325
Total	386,626,000.00	100
Financing Plan	Kshs	%
Developer	137,026,000.00	35.4414861
Debt Finance	249,600,000.00	64.5585139
Presales	0.00	0
Total	386,626,000.00	100
PROFIT
TOTAL INCOME PER YEAR	130,560,000.00
TOTAL EXPENDITURE	386,626,000.00
RETURN ON INVESTMENT IN YEARS	2.96

Assuming a modest accommodation charge of kes 2,000 per room per night, Only 20 days per month occupancy rate and the profits accrued from the sale of beverages and food to offset the running costs such as salaries, maintenance, cleaning etc, the hotel project will pay back in 3years.

Also, we have assumed construction cost per m2 to kes 40,000 .This ensures the highest possible quality of construction to take place without any compromise to workmanship and quality of materials.

A charge of kes 2,000 per night in Nakuru is still quite modest and low considering most hotels situated in such prime areas charge kes 3,500 and above per night. This ensures that the highest chance will be the rates increasing to the usual kes 3,000 to 4,000 or 100% occupancy as opposed to the assumed 20 out of 30 days occupancy rate.

With the numerous tourist attractions in Nakuru such as Lake Nakuru, Menengai crator, Lake Naivasha,Elementaita etc, this will surely attract a huge amount of visitors willing to spend at the hotel.

Use of the space as an office block.

Assuming kes 50 per square foot rent, the rental income for the 1600m2 per floor x 5 floors will be kes 48m per year.

The construction cost reduces to kes 35,000 per m2 since offices take less construction costs than hotels.

The return on investment is 7.3 years as tabulated below.

Cost Item	Kshs	%
Land	57,000,000.00	16.143193
Preliminary	1,800,000.00	0.50978504
Construction	224,000,000.00	63.4399162
External Works	11,200,000.00	3.17199581
Contingency	4,480,000.00	1.26879832
Professional fees	11,200,000.00	3.17199581
Project Management fees	2,240,000.00	0.63439916
Marketing	850,000.00	0.24073182
Financial Charges	40,320,000.00	11.4191849
Total	353,090,000.00	100
Financing Plan	Kshs	%
Developer	129,090,000.00	36.5600838
Debt Finance	224,000,000.00	63.4399162
Presales	0.00	0
Total	353,090,000.00	100
PROFIT	48,000,000.00
TOTAL INCOME PER YEAR	48,000,000.00
TOTAL EXPENDITURE	353,090,000.00
RETURN ON INVESTMENT IN YEARS	7.36

Conclusion.

Hotel investment for this plot is better than office block investment with a return on investment of 3 years compared to 7 years.

PLOT BUYERS INVITED.

Investors are invited to purchase the plot and realize their financial investment goals. Be it individuals, SACCOs, corporates e.t.c, this is a golden opportunity to propel your finances to a higher level.

Francis Gichuhi Kamau, Architect.

info@a4architect.com

0721410684.

AMMOUNT OF CEMENT USED IN AN AVERAGE 3 BEDROOMED HOUSE IN KENYA.

 

Cement cost takes an average of 35% of the total cost of construction of an average house basing on a low cost finish overall estimate of KES 20,000per m2. This is approximately KES 7,000 per m2.

The amount of cement used in total for an average 3 bedroomed residential house of 100m2 in plinth area is 958 bags at a cost of KES 691,000 basing on a price of KES 720 per 50kg bag.

A square meter of building in Kenya will use 9.6 bags.

 

2 BEDROOMED FLAT.

 

The average 2 bedroomed house in a middle class area such as Ruaka, Rongai, Kitengela, Ruai is approximately 60m2 in plinth area. This translates to 60m2 x 9.6bags=546bags costing KES 414,000.

A block of 2 bedroomed flats in the middle class neighborhoods standing on a 1/8th acre can contain 20 units. This means the total cement used will be 20 units x 546bags per unit=10,920 bags costing 7,800,000 KES.

SHOPS AND SINGLE ROOMS 1Oft by 10ft.

The average 10ft by 10ft room used as a shop or single room residence is approximately 10m2 in plinth area. This translates to 10m2 x 9.6bags=96bags of cement costing KES 69,100.

 

The breakdown is as below.

Foundation.

	weight tonnes			cement bags		cement price
	cement	sand	ballast
Blinding1.4.8	0.461538	1.969231	3.938462	9.230769		6646.154
Footing1.2.4	3.214286	6.857143	13.71429	64.28571		46285.71
Floor1.3.6	5.4	17.28	34.56	108		77760
				181.5165		130691.9

 

WALLING. Ratio of 1.4

weight tonnes cement bags cement price cement sand ballast 23.90625 76.5 478.125bags 34425

 

BEAMS AND COLLUMNS. Ratio 1.2.4

	weight tonnes			cement bags		cement price
beams	cement	sand	ballast
	5.571429	11.88571429	23.77143	111.4286bags		80228.57
collumns	0.857143	1.828571429	3.657143	17.14286bags		12342.86

 

FLOOR PLASTER. Ratio 1.3

weight tonnes			cement bags		cement price
cement	sand	ballast
1.875	6	0	37.5bags		27000

 

 

WALL PLASTER. Ratio 1.4

weight tonnes			cement bags		cement price
cement	sand	ballast
5.97	25.472	0	119.4bags		85968

 

EXTERNAL KEYING. Ratio 1.4

weight tonnes			cement bags		cement price
cement	sand	ballast
0.672	2.8672	0	13.44bags		9676.8

 

ACTUAL SITUATION ON THE GROUND.

In most small scale residential projects, the house owners usually rely on the local Fundi expertise on the mix ratio of cement. The usual tools used to measure the volumes are  spades, wheel barrows and 20 liter water buckets.

8 wheelbarrow of sand/ballast make 1 tonne.

Four wheelbarrows are used to mix 1 bag of cement to 8 bags of ballast.

I bag of cement has 0.035 cubic meters in volume.

1 wheelbarrow has the below volume.

Assuming sand has a density of 1600kg/m3 and 8 wheelbarrows make 1 tone, 1 wheelbarrow has 1000/8=125kg.

1 wheelbarrow of sand has 0.08 Cubic meters in volume.

This sand volume per wheel barrow when compared to cement volume per bag gives a ratio of 1 cement volume to 2 sand volumes.

LOCAL FUNDI MIX.

The usual mix used by local fundis of 1 bag cement to 4 bags sand is actually 1 cubic meter cement to 8 cubic meters sand to 16 cubic meters ballast.

A ratio of 2 bags cement to 4 wheelbarrows sand to 8 wheelbarrows ballast is 1 to 4 to 8 which is still low for concrete works such as foundation footings and beams which require a ratio of 1 to 2 to 4 or 1 to 3 to 6.

This type of mix works well for single storey residential houses.

BUILDING COLLAPSE.

In the event that the ratio of 1 bag cement to 4 wheelbarrows sand to 8 wheelbarrows ballast is used for a building that is several storeys high, serious risk of collapse is imminent due to a very weak cement ratio. This could be the reason for the various building collapse being witnessed in Kenya and recently in Tanzania and India.

 

Francis Gichuhi Kamau, Architect.

info@a4architect.com

0721410684.

 

Joint Venture Project along Joseph Kangethe road, off Ngong Road, Nairobi.

2 bedrm units @ 110m2 each.kes 11m sale price.
Cost Item	Kshs	%
Land	55,000,000.00	34.47843531
Preliminary	400,000.00	0.250752257
Construction	77,000,000.00	48.26980943
External Works	3,850,000.00	2.413490471
Contingency	1,540,000.00	0.965396189
Professional fees	3,850,000.00	2.413490471
Project Management fees	770,000.00	0.482698094
Marketing	3,250,000.00	2.037362086
Financial Charges	13,860,000.00	8.688565697
Total	159,520,000.00	100
Financing Plan	Kshs	%
Developer	82,520,000.00	51.73019057
	0.00	0
Debt Finance	77,000,000.00	48.26980943
Presales	22,000,000.00	13.79137412
Total	159,520,000.00	113.7913741
PROFIT
TOTAL SALES FOR 20 UNITS	220,000,000.00
TOTAL EXPENDITURE	159,520,000.00
NET PROFIT	60,480,000.00
% Profit Margin	37.91374122
Take home ammount.	115,480,000.00

Site location

[googlemaps https://maps.google.com/maps/ms?msa=0&msid=205617053586273466800.0004db187e1ef238fdabc&ie=UTF8&t=h&ll=-1.303876,36.787795&spn=0,0&output=embed&w=425&h=350]

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