MIP WEEKLY CONSTRUCTION INDUSTRIAL REPORT NO. 21

Period: January 11 to 17, 2016

The Construction Authority of Kenya has proposed that fees charged for legal and architectural services need to be scrapped off to spur growth in the real estate industry.
Through a survey dubbed, The Kenya Productivity Market Regulation 2015, the authority says the minimum fees charged lock out thousands of potential investors and individuals who rely on quacks to meet their needs.

An analyst has predicted that the real estate industry may slow down as the country gears towards the next Election.
According to Land Layby Kenya Limited director Phyllis Gathura, prospective buyers are getting jittery about buying land and houses due to the rising political temperatures.

According to a report by global Consultancy firm Knight Frank, the undercurrents within the Chinese and American economies threaten the growth of the property sector in developing nations that include Kenya for the next year and a half.
The Prime Cities forecast Report 2016 cites the slowdown in china as a catalyst for a slumped property market that previously benefited from China’s economic boom.
Local developers and financial analysts have been quick to state that china’s economic downturn may not have noticeable effects able to scuttle any gains in the real estate sector in Kenya.
Kunyiha who also chairs the Kenya Property Developers Association says Kenya should not be so fixated with the “Chinese effect” as Kenya’s real estate industry is not overly reliant on the Asian giant for capital inflows. He says that THE Chinese economic Undercurrent may affect the big Chinese companies doing businesses in Kenya.

The upgrade of the 960 km Eldoret – Juba road, set to start in a few months’ time, has stirred up activities and attracted investors to set up satellite colleges, petrol stations, bars, retail shops and modern residential housing.

The Kisumu’s real estate company; Expanded Polystyrene (EPS), plans to put up low cost housing whose rent will range between Ksh. 4,000 and Ksh 10,000 depending on the size of the house. Currently a one bed-room, which is equivalent of these low income house units, goes for Ksh. 15,000. Most locals cannot afford this kind of rent.
The technology is currently in use in Nairobi and other south Asian countries such as Malaysia. It has a significant cost reduction of about 30%.

Old mutual property, a subsidiary of Old Mutual plc has invested 6.4 bn in Two Rivers Lifestyle Centre (TRLC), the holding company of the Two Rivers Mall. The investment sum is equated to the investment made by the Aviation Corporation of China (AVIC) for a 38.9% stake in the entire development. This investment is equivalent to a 50% stake in the company with 10% of the stake in cash and the remaining 40% as convertible loan. Old mutual consider the Two Rivers mall as a yielding asset given it is nearing completion. This transaction depicts
The attractiveness of Real Estate in Kenya especially the retail sector which offers high yields of 11% in high-end areas of Nairobi and the ability to exit as depicted by Centum holding exiting a significant percentage of the mall.

Prospective companies/investors should source for the required expertise early enough so as to ensure timely completion. The English Marina was projected to end and launched by 2012 yet it was launched in 2016.
Qualified and specialized contractors should be sourced to carry out such special undertakings so as to minimize on errors and thus save on cost and time. In the case of the English marina, 0.3 billion was incurred due to errors and delay.