MIP WEEKLY CONSTRUCTION INDUSTRIAL REPORT NO.13

Period: October 26 to November, 2015

According to Kenya Bankers Association Housing Price Index (KBA – HPI), the rate of growth in quarter three fell below that of the first three months of 2015.
The housing sector has remained sluggish despite prices rising marginally in quarter three as home buyers delayed borrowing decisions over high lending rates.
Banks have begun increasing their interest rates as a reaction to the high cost of treasury bills. Banks are now lending at interest rates as high as 28% per year and KBA expects the rates to further suppress the mortgage market.
The KBA Index indicated that demand of housing was also affected by the location of the houses, availability of social amenities, malls and access to good roads. There was a preference for apartments over bungalows.

Stanlib Investments, freshly boosted by Ksh 1.5b IFC injection, plans to buy the Greenspan mall in Donholm for Ksh 2b after its Real estate Investment Trust (REIT) sale.
It notes that the mall will generate rent up to Ksh 167 million per year.
The development comprises 270 residential units and a retail centre with a gross lettable area of approximately 16,105 sq. with 1000 parking spaces.
The retail centre is located on 9.5 acres. The net rental income for 2015 is approximately Ksh 165 million per annum and the estimated net yield is 8.1 per cent with a five year internal rate of return ( IRR) of 18.56% at property level

According to a report by Hass Consult released last week property investment , Land and housing developments remains the most lucrative in Nairobi and its environs, especially at this time when other sectors are being affected by the weak shilling against the dollar and other harsh economic climates.

Mabati Rolling mills has broken ground for a Ksh 2.5 bn metal roofing colour coating plant in its Mariakani complex in Nairobi.
The plant which will be equipped with the latest technology will produce more than 100,000 tonnes of colour coated steel per annum.
It will provide diversity in colour coated steel roofing to fulfill future demand.

Owing to proximity to Nairobi, many little centres on Kiambu road have experienced a property boom in the past few years. They include: Thindigua, Kasarini, Mushroom, Kugeria and Njatha-ini.
Thindigua for instance is now dotted with modern residential houses, rental flats, and apartments for sale. In addition, there is a mall under construction.
Thindigua is benefiting from its strategic location between Nairobi and Kiambu, which makes it accessible to both.

Resort and cities is set to put up a Ksh 5billion mixed use development in Muranga County.
Makuyu Ridge, a resort city in Makuyu, will be built on 1,000 acres and will have an 18 hole golf course, shopping mall, club houses and other facilities.
Construction is expected to kick off in February 2016 and will run for three years.
The Developer will put up all the infrastructure and then sell the plots to buyers who would then build the houses.