Mega Housing Projects changing face of Mtwapa

PERIOD: 5 to 12 September, 2016

08/09/2016 : The Standard, Home and Away, Page 2

• A new housing development by the Kenya Medical Association is changing the face of Mtwapa in Kilifi Country.
• The Sh1 billion complex consists of 20 blocks, each with eight two-bedroom apartments on a five-acre plot located just after Greenwood Resort.
• It was completed in June and is ready for occupation. Each of the 160 apartments has an ensuite bedroom with an extra bathroom for guests. A reverse osmosis water purifier ensures that residents of this estate always have clean water, with options for hot water instant showers.
• Other features include a cabro-paved driving track, swimming pool, gym, restaurant, supermarket, conference facilities, a bio-digester and landscaped areas. According to Benedict Mutuku of Goldwyne Consult, the marketing agents, although Mtwapa does not suffer endemic insecurity, the developers have ensured adequate safety measures are in place.
• Mtwapa is also attracting other projects. Located about 16 kilometres North East of Mombasa, the area attracts foreigners, who have contributed to its property market growth.Read more

State to have final say on land compensation figures

08/09/2016 : The Standard, Home and Away, Page 2

• The government is drafting a  law that will deny land owners a sayon how much they are paid in case of compulsory acquisition. The draft legislation proposes to make the government valuer the sole authority on how much a parcel of land set for acquisition  by the government will be paid for.
• It also proposes land swaps.
• The law aims at curbing land speculation in areas with land identified for public projects.
• The government is alarmed by the inflation of the cost of land  by land speculators thus making it extremely difficult for them to implement mega projects.

Italian firm to build 500 houses in Kenya

08/09/2016 : The Standard, Home and Away, Page 2

• Italian firm Udinese Holdings Ltd. will build 500 housing units starting this month.
• The units will be built in Birika, Kiserian, Karen, Nanyuki and Narok.
• The company has just received ksh 2 Billion  funding from Italian Bank Bianca Dimola to cater for the first phase of the project.
• The development will comprise four bedroom units with a (domestic quarter, all done using Italian – Spanish  designs but with an African taste.
• All the units will be built using an Italian Technology, which ensures the structures and processes are environmentally friendly.
• The houses will be constructed on a quarter, half and one and five acre plots depending on client’s budget.

Target millennials to grow tourism numbers

08/09/2016 : The Standard, Home and Away, Page 2

• Anew report has called on players in the tourism sector to develop products targeting the millenials  “as they are the future of Kenya’s hospitality industry”
• The Jumia Travel Report says there is a growing need for hotel owners and tour operators to design products and packages for the emerging group of millennial travellers who may no be keen on luxury as compared to convinience, budget  and flexibility.
• According to Eugene Too, the online revenue manager for the Panari Hotel, the millennials are very clear about what they are loooking for, fun and adventure.
• The report indicated that single or individual travellers are also popular.

Fusion Capital to use Privately raised cash for Meru Project

08/09/2016 : Daily Nation, DN2 Page 2

• Fusion Capital will fund the shs 2.3 Billion mixed use development from privately from privately raised cash and use debt only as a last reosrt, the fund has said.
• This comes after the company achieved only a 38% success rate in a bid to raise the cash through a development trust (D-Reit).
• The firm raised Ksh 873.9 Million leaving a Ksh 1.426 Billion deficit. CEO Luke Kinoti, said the development in Meru is already underway and is 35 % complete, with the apartments already 50% booked while the mall has 25% booking.
• Nakumatt holdings, Kenya’s largest retailer, has booked space in the mall as the anchor tenant while Mimosa Pharmacy, Optica and Lynn Marie (Beauty products maker) are sub – anchors.

Equity CEO joins the fray in disputed Muthaiga land

08/09/2016 : Daily Nation, DN2 Page 2

• Equity Bank CEO James Mwangi has laid claim to the multi million shilling Prime Nairobi land at the centre of a vicious legal battle between the United States International University – Africa (USIU – A), businessman George Kiongera, and former President Daniel Arap Moi adding a new twist to the saga.
• Mr. Mwangi says in suit papers filed in court that he bought the 20 acre piece of land from Mr. Moi in February 2012 for Ksh 300 Million after  confirming that the former president legitimately owned it.
• The Equity Group C.E.O filed the suit against USIU -A, Mr. Moi, Mr Kiongera’s Maestro Conncetions Health Systems Ltd, The Chief Lands Registrar, the Director of survey and Attorney General Githu Muigai.
• Mr. Kiongera and USIU -A have since July been fighting an ownership battle in court, with the US – based businessman claiming to have bought the land from Mr. Moi for Shs 500 million.

Dangote’s Cheap Cement a boom to local Developers

08/09/2016 : Daily Nation, DN2 Page 3

• Nigeria’s Dangote Cement has started its shaking up the Kenyan Market by importing the commodity from its plant in Ethiopia and selling it cheaper than locally produced ones.
• Dangote’s targeting of the Kenyan consumer with low cost cement is expected to further drive the retail prices downwards in a market where they have remained static for nearly 10 years and could prove a boom to local developers.
• Dangote  said the cement exported to Kenya is priced at about $74 (Ksh 7,400) per tonne, making it up to 40% cheaper than locally manufactured brands
• Importing cement is seen as Dangote’s short market entry plan as it prepares to establish a local plant.
• The company is looking to build a factory in Kenya, which is envisaged to be in operation in 2019.

Centum to build 23 megawatt solar power in vipingo

08/09/2016 : Daily Nation, DN2 Page 3

• Centum plans to put up a 23 megawatt solar power plant to supply electricity to a mixed use real estate project to be built in Vipingo Kilifi County
• The firm said works on the solar farm, whose cost is still unknown, will start once it gets a power generation and distribution license from the Energy Regulatory Commission.
• Centum is building the development on a 10.254 acre piece of land it bought last year from Rea Vipingo Holdings, a sisal plantation firm that sold part of its land as it de – listed from Nairoci Securities Exchange (NSE).
• Cement will be seeking shareholders’ approval to form a special purpose vehicle known as Rea Power Co. to generate and disstribute power  within the proposed development.
• The firm has said it is currently at the design phase of the project.
• The firm will also lay the necessary power infrastructure such as substations and cables in the planned development.
• The Vipingo project includes an industrial zone where firms will be alloted 20 acre plots to set up their operations.

How to stop unplanned development

08/09/2016 : Daily Nation, DN2 Page 3

• Despite the chaotic situation in many urban areas, Mr Henry Ochieng, the Kara CEO, says all is not lost.
• “It is comforting to note that after 14 years of operating without a master plan, the Nairobi City County Government recently launched the Nairobi Integrated Urban Development Master Plan (NIUPLAN), which is to be implemented over 16 years. The County Government, led by Governor Evans Kidero, must ensure that the plan is fully implemented in order to address the city’s development challenges. Relevant policy guidelines and legislative frameworks should be put in place to facilitate the smooth implementation of the plan.”
• Another option is for the government to delegate some of its supervisory roles to residents’ associations. County governments, for instance, should encourage residents’ associations to develop local physical development plans (LPDP) for their neighbourhoods by endorsing such plans and ensuring that developments that contravene the LPDP or other planning regulations are not approved. Effective collaboration with residents associations, Mr Ochieng says, will greatly complement the work of the county government and restore order in the city.
• “County governments still insist on sending their inspectors to the field even when it is clear that they do not have the capacity to patrol the entire city. This role can easily be designated to residents’ associations, which will do it better. Residents associations can also collaborate with the county governments on solid waste management to keep their estates and surrounding neighbourhoods clean,” the Kara boss says.
• Housing expert  Robert Sang’ori agrees, saying that most residents’ associations are poorly structured and often voice their concerns when it is too late. There are however, success cases.
•  “In estates like Runda, Karen and Muthaiga where the residents associations are vocal, the zoning regulations are rarely flouted,” he says.
• Kara has since initiated the formulation of a Bill aimed at promoting structured partnership between residents’ associations in Nairobi and the Nairobi City County Government in order to strengthen the policing of developments at the neighbourhood level and ensure that the relevant laws are adhered to. The Nairobi City County Community and Neighbourhood Associations Engagement Bill, which was recently signed into law by Dr Kidero, recognises community and residents’ associations and provides clear mechanisms for collaboration on planning and other service delivery issues.Read more

Kenya Projects bets on cheap houses in Posh Coast estates

08/09/2016 : Daily Nation, DN2 Page 4

• The property market in Mombasa County is experiencing a major shift, with low-cost houses now making their way into the up-market areas of Nyali and Shanzu.
• Kenya Projects, a property development firm, is putting up low-cost houses in Shanzu, with the firm saying  that of the 100 units being sold off-plan. 30 have been taken.
• The two-bedroom units with a car park are located about 500 metres from  the Serena Beach Hotel and are going for Sh2.5 million, which is way below the normal price of between Sh5 million and Sh10 million in the locality.
• Mr Anthony Murithi, the firm’s project adviser says the prices of houses in Nyali, Shanzu and Mtwapa have been inflated due to costs associated with the involvement of agents and the high cost of materials.
• Developers have also had to contend with high cost of finances, which he said they have eliminated by selling the units off-plan.
• The shift from high- to low-cost housing  comes in the wake of concerns among developers that sales of high-end properties were dwindling after supply exceeded demand, with prospective home owners preferring to buy low-cost houses.
• According to the Hass Property Index, Nairobi is experiencing a glut, especially in the high-end segment, with the price of houses on the city’s outskirts falling. Rents for high-end  houses are also projected to fall. Read more

Real estate as a stock investment opportunity

08/09/2016 : Daily Nation, DN2 Page 5

• Given the popularity of real estate as an asset around the world, it is perhaps surprising that there are not many pure, real estate firms listed on the Nairobi Securities Exchange.
• However, there are a number of  firms listed on the NSE which offer indirect exposure to real estate through assets held on the balance sheet. Notably, and Superior Homes (Kenya) Ltd has become the latest pure real estate company to announce it’s intention to list on the NSE.
• For investors, a stock exchange listing gives liquidity to a real estate investment, meaning they can put cash in and get it out to suit their own liquidity requirements and their views on the market. It also offers higher levels of accountability and corporate governance so that investors can feel more secure.
• For real estate companies, the listing offers tax incentives as well as the ability to tap vast pools of equity and debt capital, in particular from pension funds and international funds. This money can be used to further develop their projects and this financing generally comes in at a lower cost for a listed company than for a private company. The profile raised with a listing also offers a kind of “free marketing” that helps to drive sales and this becomes a win-win for existing and new shareholders.
• Superior Homes is a mature company with a proven track record. Last year the company was placed sixth out of the Top 100 small- and medium-sized enterprises in Kenya.
• Importantly, it operates in the upper mid-level segment of the residential real estate market.  Its flagship Greenpark Estate development in Athi River is  known to many in Nairobi. The development is at an advanced stage, with 520 houses built and sold, and infrastructure in place for the remaining 200 units to be completed by 2020.Read more

Tough new laws bring a ray of hope to industry

08/09/2016 : Daily Nation, DN2 Page 5

• The announcement by the government that it is going to streamline the construction industry through tough laws  brings hope to a sector, which has been bedevilled by a host of problems.
• During  a stakeholder’s meeting  in Nairobi recently,  Land and Housing PS Aidah Munano said: “The new regulations are out and we are publishing and disseminating them to sector actors. It is expected that they will bring about the overdue order, health, safety and harmony in the building industry.”
• Ms Munano said the Government attaches great importance to  the construction industry, hence its concern about the prevailing rot, which has led to the collapse of buildings, resulting in losses for both the government and developers.
• “To underline the government’s seriousness in reversing the tragedy in the sector, President Uhuru Kenyatta has ordered us, policy-makers in the ministry, to set up a special unit to inspect all buildings and to determine their suitability for human occupation,” she said.
• She noted that the problems in the sector result from incompetence, unprofessional practices and lack of capacity within the institutions responsible for  regulating the sector.
• “We are privy to statistics showing that that only 48 per cent of the buildings recently audited met the minimum standards while 52 per cent had defects which could be rectified by the owners,” she said.
• She added that some buildings were found to be extremely dangerous, making it necessary to evacuate the tenants and obtain legal orders to pave the way for their demolition.
• “The only handicap is that the crooked developers fight back through court  injunctions. We also have a problem with working harmoniously with some county governments who, by law, are partners in the building industry. Capacity building structures and defining a clear-cut hierarchy of action between ourselves will pave the way for speedy administrative action that will see errant practices punished to bring an end to the lethargy in this important sector,” she said.
• Ms Munano further called on professional bodies to play their rightful role in ensuring discipline in professional matters, emphasising that discipline must be enforced through registered professional bodies such as the Board of Registration of Architects and Quality Surveyors (BORAQS) and the Engineers Regulatory Board (ERB).
• She said all construction firms as well as individual expertise/trade must be registered, and  must maintain up- to-date NCA classification. Read more

Murang’a County Government offers real estate developers tax holidays in a bid to boost real estate development in the county

11/09/2016 : Cytonn Weekly Report No. 36

• In a bid to attract real estate developments in the country, Murang’a County Government announced an incentive pack to developers consisting of:

1. Up to a 5-year tax holiday
2. A waiver on all legal charges incurred in land acquisition

• The above measures they believe will spur growth in not only the real estate in the county but also the county’s agricultural processing plants.
• In cytonn’s opinion the above measures though noble will not be sufficient to boost the real estate sector in the county which has witnessed slow growth compared to neighboring counties such as Kiambu.
• This is because the measures put in place do not address the key challenges facing real estate development in the county which are:
  • Relatively high land prices with un-serviced acre in Kenol being sold for Kshs 9.0 – 15.0 mn on average yet more urbanized areas such as Ruai a similar land parcel is going for Kshs 3.0 – 4.0 mn
  • Low disposable income among the population as the county has a per capita income of Kshs 9,083.0 per month and
  • Low urbanization rate at 16.0% against the neighboring Kiambu’s County, which is at 60.0%. The County Government thus needs to boost economic activities and invest in infrastructure in the county to increase the populations’ income, which will eventually increase the rate of urbanization. Read more