• The National Social Security Fund (NSSF) has abandoned its plan to raise Hazina Trade Centre to 39 floors, dashing Kenya’s ambition of hosting Africa’s third tallest building after South Africa’s Carlton Centre and Egypt’s Cairo Tower.
• The NSSF halted construction works at the building to seek a second opinion from the Public Works ministry.
• Last week, NSSF chairman Gideon Ndambuki told the Public Investments Committee (PIC) that the ministry’s report had indicated that going beyond 25 floors would be catastrophic as structure’s beams could not support a skyscraper of such magnitude.
• “We have our full board meeting on October 24 where we will discuss the report from the ministry and decide the way forward,” he told the Eldas MP Adan Keynan-chaired committee.
• The ideal structure for NSSF is set to be dwarfed by a number of Nairobi’s skyscrappers, among them, the 140-metre Times Tower, the 163m-high UAP Old Mutual Tower and 195 metre-tall Britam Tower.
• The NSSF hired Chinese construction company China Jiangxi to finish building the 39-storey building, which already had eight floors including the four that house Nakumatt.
• The supermarket chain had earlier complained that the works were a disruption to its business and moved to court two years ago seeking to block the building of additional floors above its Nakumatt Lifestyle branch.Read more

• Shareholders of battery-maker Eveready East Africa are set to receive a special dividend payout from the sale of the company’s land in Nakuru.
• The Nairobi Securities Exchange-listed manufacturer says the payout is based on anticipation of a significant gain from the disposal of the 18.5-acre land on which its closed factory sits.
• “The net proceeds will enable the company to proceed with a proposed capital return to eligible shareholders subject to all approvals being obtained,” the portable power solutions provider said in a circular to shareholders.
• The payout, expected next year or in 2018, will end the dividend drought that started in the year ended September 2008.
• Eveready last paid a dividend of Sh0.45 per share for the year ended September 2007, with losses in most of the subsequent years leaving shareholders without dividends.
• The dividend drought has been compounded by a long-term decline in the firm’s share price to the current Sh2.05, representing a capital loss of 78.4 per cent compared to the listing price of Sh9.5.
• Chief executive Jackson Mutua declined to give the estimated sales proceeds, only observing that the cash “will be enough to reduce the firm’s debts and leave a surplus for the special distribution.”Read more

Urithi bets on budget model with Sh1.6m home

04/10/2016 : The Standard, Business Beat Pg. 3

• Urithi Housing Co-operative Society has launched Sh1.6 million two-bedroom apartments along Kangundo Road, Machakos County. The co-operative, which is set on making in-roads in the low-cost housing segment, said it has come up with a new model where buyers co-own the property right from the start.
• This, it said, has allowed it to bring down costs by between 40 per cent and 60 per cent. “Most developers go to the bank to get money to put up the houses, and then they have to factor in interest and their margin on pricing. But with our concept, we cut out these costs and allow home owners to be part of the development, and this is why we are able to deliver a house at Sh1.6 million,”
• Urithi Housing Co-operative Chairman Samuel Maina said in an interview.
• The firm said it is giving buyers the flexibility they need to buy the home with monthly repayments closer to what they would be paying in rent.
• The Osten Terrace Gardens two-bedroom apartment project is located in Joska, which is about 13 kilometres from the Eastern Bypass along Kangundo Road.
• The houses are 600 metres from the tarmac at Joska. The project sits on a five-acre property and comprises three-storey apartments. There are four different plans for non-cash purchasers to pick from.
• In the one year plan, after a deposit of between Sh200,000 and Sh1 million, monthly repayments range between Sh50,000 and Sh120,000.
• For the two-year plan, monthly deposits drop to as low as Sh30,000 depending on the deposit made, while for three years, one can make monthly repayments as low as Sh21,000.
• In the four-year plan, monthly deposits drop to Sh16,000, and as in the other plans, deposits range between Sh200,000 and Sh1 million.
• Buyers get their homes allocated to them immediately or after a maximum period of 14 months, depending on the payment plan selected.Read more

Three projects of 2016 that will become landmarks

06/10/2016 : The Standard, Home and Away Pg 5

• Real estate has continued attracting billion-shilling developments and as we enter the third quarter of the year, we look back at three projects that promise to stand out.

1. Montave, Upper Hill, Nairobi

• This beautiful skyscraper by Greenfield Developers Limited promises to be a landmark in more ways than one. Expected to stand at 40 floors, it promises to be an architectural masterpiece with one million square feet of mixed-use space.
• The development will be set on a 3.54-acre site in Upper Hill, Nairobi, with an “intricate mix of shopping, working, visiting, living and leisure”. The project, launched in August, hopes wants to “deliver Nairobi’s most prestigious address, offering the best in luxury, practicability at a convenient and central location”.
• Real estate firm Hass Consult will direct the design, construction and management of Montave, whose developers include an investment consortium comprising local and foreign investors. While the total cost of the project is unclear, the land on which the project will sit is valued at Sh1.83 billion, coming to slightly above half a billion shillings per acre.
• Construction of Montave is expected to begin in the second half of 2017 and is expected to be completed within three years

2. Greenwood Mall, Meru

• The Sh3.7 billion real estate development will undoubtedly be a landmark feature in meru. The developers, Fusion Capital, will use money raised from Development Real Estate Investment Trust to put it up.
• The mega development will comprise a shopping mall, an office block and apartments. “Greenwood City was conceptualised to meet this need and provide first-class shopping and executive residential accommodation for a growing and vibrant middle-class and grade an office space for firms doing business in the region,” said Fusion Capital CEO Luke Kinoti.
• In August, retail chain Nakumatt, indicated that it would be the anchor tenant.

3. Situ Village Karen

• The iconic gated community development is expected to cost the developers Sh5.5 billion. The project, which broke ground in August, will offer the targeted community a modern live, work and play environment. It will sit on a 29-acre plot in Karen, Nairobi, which borders the Ololua Forest.
• Situ Village will comprise four-bedroom villas that will sit on half an acre piece of land. The project will also boast a relative proximity to retail stores, shopping malls, dining options, and will offer access to outdoor entertainment centres such as the Giraffe Manor.Read more

Growth: The changing conversation on housing

06/10/2016 : The Standard, Home and Away Pg 5

• The conversations around housing revolve a lot around the question of affordable housing. Once in a while, debates would turn to different issues but it always comes back home to affordable housing.
• As the US market tumbled in 2006, every second sentence on real estate was punctuated by “bubble burst”. Along came the gated community frenzy and a host of conversations such as the rise of alternative building technologies. Despite all the talk on affordable housing, at no one time has attention been actually paid to the question as it is being done today.
• In most cases, the unasked question has been: Affordable to who? For a time we had, and still have, houses selling for upwards of Sh7 million touted as affordable homes. Never mind the number of Kenyans who can afford that price is very small.  It is not until talks of homes selling for less than Sh3 million that people sat up and took notice. And like a lot of other things, private firms were in the fore front.
• While it is generally agreed that to achieve the elusive dream of making homes available to more Kenyans of modest means the government would have to take a more active role, this has rarely been the case. Today, however, the tide is turning with the government showing more than a passing interest in making this a reality.
• One only hopes that it is not the workings of a campaign year. Some analysts have argued that when the high-end segment of the market became saturated, developers would as a matter of business turn to the lower income segments. This, too, is coming to pass. With this, new conversations are being woven.
• Major infrastructure projects are opening up areas few would have thought of venturing into and devolution is turning forgotten rural towns into booming hubs. After a decade of real estate boom in major towns, the next decade belongs to the smaller towns.
  Read more

Nyeri hotel designed like castle up for grabs

06/10/2016 : The Standard, Home and Away Pg 5

• When the Nest Manor residence and suites was designed, it was aimed at giving the building a royal feel, inspired by the desire to achieve a homely feeling away from home.
• The word manor is described a large country house. History, it refers to an estate with a royal charter or owned by a Lord. Grandiose is something the architects of this hotel, led by Kenneth Kilole, seem to have had in mind. The hotel, which depicts a castle-look and is aspiring upon completion to achieve a five star rating, is a boutique hotel sitting under Mt Kenya in the King’ong’o area of Nyeri.
• “The hotel sits in a master plan called the Nest Park Village where it will comprise well-planned residential town houses and apartments in Nyeri Town,” Peter Mahu, the proprietor, told Home & Away. Construction of the towns houses and apartments will start from the first quarter of next year.
• Mahu said the hotel, which is still under construction with a completion date slated for the fourth quarter of 2017, will have 25 rooms. The hotel will also have a suspended heated swimming pool with a well-equipped spa with sauna, steam bath and a modern gym.
• “Also on the cards are modern conference facilities, including meeting rooms, a reception and food courts,” said Mahu. Ownership
  He said they plan to sell the hotel rooms to investors who will be entitled to monthly rental income for the rest of their lives. He said that the three types of rooms — deluxe, executive and premier — suites will be co-owned by five individuals.
• A deluxe suite room investor will pay Sh1.94 million per share with a deposit of Sh500,000 and payment of Sh120,000 per month for a year. According to Mahu, the return on investment for a deluxe room will be Sh315,000 per annum for an individual.
• For the executive suite room, one will part with Sh2.4 million per share with a deposit of Sh600,000 and payment of Sh150,000 per month for 12 months. The return on investment for an executive room for an individual will be Sh395,000 per year.
• For the premier suite room, one will pay Sh3.6 million per share with a deposit of Sh900,000 and payment of Sh225,000 per month for 12 months.
• The return on investment for a premier room for an individual will be Sh595,000 per annum. The hotel will be run by a management company.
• Upon completion of payments, an individual is entitled to a free holiday for six days in a year, with discounted rates for meals in the restaurants.Read more

Things looking up for hopeful home buyers

06/10/2016 : The Standard, Home and Away Pg 5

• For over a year now, housing indices have been reporting a stagnation in prices for high end homes. At the same time prime rental yields have also dropped slightly. This, put together, with government policy moves promise to shift the focus to lower priced homes, offering those who want to buy homes but can hardly afford to due to the prevailing high prices and shortage of home sin the lower income brackets a lifeline.
• A Global Property Guide report released this year indicated that Nairobi is ranked among the most expensive cities in the world and the property market has experienced the highest number of costly houses ever in the last seven years. House prices and rents are also skyrocketing, making it hard for the low income earners to own and rent desired homes.
• “Using the ratio/rent, that is years of rent that would be required to buy a property, it would take up to 14 years to own a 300-square metre apartment in Nairobi’s up-market residential areas,” said the Global Property Guide report. It noted that the number of people who own homes in the cities is 18 per cent, on average.
• However, majority of the low income earners do not own homes owing to the few developers ready to finance projects in that segment. In July this year, the Knight Frank Prime Global Rental Index showed a mixture of rising supply and falling demand, which resulted in a decline in prime residential rents in the first three months of the year.
• At the time, Charles Macharia, Senior Research Analyst at Knight Frank Kenya, said: “Demand for prime rental properties has traditionally been from expats. Rents have trended lower as we are seeing weakened demand from this segment of the market due to multinational firms downsizing as a result of adverse economic circumstances driven by low commodity prices.”Read more

Nairobi’s Prime Rents worst performing

06/10/2016 : The Standard, Home and Away Pg 5

• It is bad news for Landlords and good news for tenants as Nairobi emerged the weakest performing market in the prime rental segment.
• Rents fell by 9.2% between July 2015 and June 2016. Knight Frank’s prime Global Rental Index which tracks the change in luxury residential rents across 17 cities globally says since third quarter of 2011, Nairobi has recorded an annual prime rental growth of 9.7 per cent on average.
• “The  market is now looking to re-balance.”said the report.
• The only other African market on the list is Cape Town, South Africa which recorded a 1.5% increase in the year to June 2016.

Surveyors in Partnership to Improve Standards

06/10/2016 : The Standard, Home and Away Pg 5

• The Royal Institute of Chartered Surveyors (RICS) has partnered with Kenyan quantity surveyors  to work towards blending Domestic and global best practices in standards in the construction sector.
• The partnership will see Kenyan quantity surveyors being certified and recognized world wide.
• “The Kenyan quantity surveyors be will now  be able to offer their services not just here in Kenya but globally after training through RICS Online Academy and other facilities through continuous Professional development on International best practices”said Wafula Nabutola, RICS’s Sub Saharan Africa regional director

 Mortgage holders to get additional relief

06/10/2016 : The Daily Nation, DN2 Pg 6

• Mortgage holders will benefit from a Ksh 3,750 relief on their monthly earnings after the law was amended to reduce their taxable income.
• The Finance Act, 2016 says that the interest portion of Mortgage repayments will be tax free up to ksh 25,000 up from the previous 12,000
• This means that mortgage holders will be allowed to deduct up to ksh25,000 from their taxable income, with the remainder taxed in line with the Normal taxation brackets.
• The relief will also apply to those who took loans to develop or refurbish their homes. However, it is applicable only for single residential dwellings where the owners lives.
• The relief applies to all loans taken to buy or refurbish properties from banks saccos and Insurance companies.

 Kenyans no Longer restricted to Brick and Mortar for building

06/10/2016 : The Daily Nation, DN2 Pg 6

• Kenyans will in the next five years be allowed to build homes and office blocks using affordable local raw materials, bringing down the cost of construction
• This follows a policy shift, which will see the country drop the stringent guidelines that have long restricted developers to the expensive brick and mortar technology.
• The country is moving away from the British Standards and codes of practice used In Kenya since the 1960’s. In its place it will domesticate the European Construction guidelines  (Eurocode ) by 2021. The guidelines are now used globally.
• The state department for Public works said the new construction guidelines allow for innovation, hence use of locally  available materials as long as they pass safety tests. The department added that the new technology will also reduce the cost of building.

Expansion of higher learning Institutions fuels housing booms

06/10/2016 : The Daily Nation, DN2 Pg 6

• Developers venturing into the housing business in Nyeri are focusing on affordable rental houses and hostels to satisfy the increasing demand  for accommodation by university and college students.
• The county Director for Infrastructure ture and Housing, Ms Beatrice Langat, says Nyeri County has undergone a remarkable change as more investors, mostly learning institutions, find their way to the county’s main towns.
• Ms Langat said in the last three years, more public and private universities have set up satellite campuses in Nyeri and Karatina towns, with the latest being Kenyatta and Mt. Kenya Universities.
• Middle – level colleges have also set up campuses in Nyeri, Karatina and Othaya, increasing the demand for housing as many of these institutions do not provide accommodation.

The government has initiated the process of developing the Kenya Railways Corporation’s mega projects in Nairobi, Mombasa, Kisumu and Voi in the wake of private developers embracing masterplan development concepts.

09/10/2016 :Cytonn Weekly  Report No.40

• Over the past week, the government commissioned studies to determine the most effective investment option for the mega projects that will be strategically located along the Standard Gauge Railway in Mombasa, Nairobi, Kisumu and Voi.
• The envisaged plan will involve putting up of office blocks, hotels, shopping malls and industrial parks. The proposed undertaking of Kshs 217.0 bn will be done through a mix of joint ventures, franchises and build-operate-transfer (BOT).
• The BOT option will allow the investors to develop a section of the cities, operate them until they recover their initial capital outlay as well as their profits after which the investors will be expected to transfer the development back to the government.
• The Kenya Railways Project will be set on 100 acres in Mombasa, 200 acres in Nairobi and 75 acres in Kisumu. Once completed we expect Kisumu to be opened up as a major transport terminal in the great lakes region and consequently attract more real estate investors in the region.
• Nairobi on the other hand will be the greatest beneficiary given the strategic location of the parcel between the CBD and the industrial zone hence being a preferable residential area and consequently attract retail investment.

Chandaria Industries  to set up a Kshs 5.0 bn tissue paper manufacturing factory

• Chandaria Industries announced their plans to set up a Kshs 5.0 bn tissue paper manufacturing factory within their 29-acre leased parcel which is part of the Tatu Industrial Park in a bid to double its production capacity.
• The firm hopes to complete the construction in the next 4 years resulting in creation of over 1,000 job opportunities.
• Unilever, Kim-Fay East Africa and Maxam are some of the other major firms that have shown interest in the 2,500-acre masterplan development. Newtown Athi River, Tatu City, Konza City, Northlands, Tilisi and Thika Greens are some of the major masterplan cities earmarked for development within the Nairobi Metropolis.
• This is an indicator of the huge demand for comprehensive developments with reliable infrastructure. The biggest advantage that end users will derive from the masterplans are reliable power supply, good quality and widespread road network, water and sewerage connection which are not very reliable in scenarios where they are provided by the public sector.

Knight Frank’s market report for the H1’2016.

• Knight Frank released the market report for the H1’2016. The report indicates that the construction and real estate sectors continued to thrive resulting in growth of Kenya’s GDP by 5.9% for Q1’2016 compared to a 5.0% growth for a similar period last year.
• The retails segment in Nairobi witnessed stagnation of the monthly rent at an average of USD 48.0 per square meter. This is due to increased retail space supply with more retail space anticipated in the coming years. Consequently, tenants leasing retail space continued to enjoy flexibility in their lease structures such as zero escalation rates which is a bid by the retail space providers to attract the right tenant mix within the malls. Other key highlights include;

1. Office space experienced a 28.0% increase in the absorption of Grade A & B offices space compared to the H2’2015 and a 22% increase compared to H1’2015. However, due to the increased supply, the rents and the selling prices remained relatively stable over the period at approximately USD 21.0 per square meter per month and Kshs 130,000 to 150,000 per square meter exclusive of VAT respectively, and
2. For the residential sector, the prices for high end developments increased by 1.3% in H1’2016 as compared to a 2.0% increase in H1’2015. The rents for this class of residential property dropped by 8.0% in H1’2016 compared to a 0.0% change in the similar period last year. This can be attributed to increased supply and the downsizing of operations by firms in the oil & allied sector and decentralization of parastatals which had previously taken up a sizeable Grade A & B office space. On the other hand, favorable interest rates resulted in the increase of mortgage uptake by 11.0% in H1’2016.Read more