MIP WEEKLY CONSTRUCTION INDUSTRY REPORT NO.43
Tenants of Condemned buildings won’t leave.
PERIOD: JUNE 13 to 19, 2016
13/06/2016 : The Standard, Pg. 19
- Defiant tenants living in unsafe buildings in Huruma have dared the government to evict them.
- They made it clear that unless the state compensates them with at least sh 10,000, they will stay put despite the dangers involved.
- However some caretakers and landlords have resorted to repainting their buildings to cover up the demolition signs. The demolition targets some 226 buildings in Nairobi.Read more
Tanzania to build new modern city In the North
14/06/2016 : The Daily Nation
- In a few years from now, people in northern Tanzania’s tourist capital Arusha will be living outside the current city, following the proposed satellite city.
- The new city is expected to decongest Arusha the main gateway to the tourist destinations of Ngorongoro Conservation area, Serengeti, Lake Manyara and Tarangire National parks.
- The city dubbed “Safari City “will be located in Matavesi area. Tanzanian Authorities in the region are optimistic that the Ultra – Modern will completely change the entire outlook of Arusha.
- The proposed town will be executed by the Tanzanian’s National housing corporation (NHC). The state –run real estate firm has floated nearly initial 600 plots for residential use.
Big malls eye SME’s as competition for tenants hots Up
14/06/2016 : The daily Nation, Smart Company, Pg. 5
- Mall developers desperate to sell space are now targeting small businesses as competition intensifies.
- Some developers are even enticing small businesses with loans to finance uptake of space and even partnerships to set up shop in the facilities.
- Uptake of space among corporates has reduced forcing malls to look elsewhere for customers. According to the 2015 market update by Knight Frank, tenancy in malls fell by nearly one half last year confirming fears that supply of formal retail space is higher than demand.
- Absorption of formal retail space declined by 45% compared to the first half, largely because major retailers had already secured space in the upcoming developments.
Malls coming up in Every Inch of Nairobi Space.
14/06/2016 : The Daily Nation
- According to Knight Frank’s 2016 Sub –Saharan shopping centre developments Trends’ Nairobi which has a population of 3.8 million people already has 391,000 square metres of existing mall space with an additional 470,000 square metres in the pipeline.
- On Mombasa road before yopu get to Athi River, there are four different malls being developed.In Embakasi there are different malls under development. On Thika road there is a mall every one Kilometre.
Urban households trade off decent housing for food and accommodation
14/06/2016 :The Business daily, Pg 12
- A study by World Bank shows that the shortage of high quality affordable housing in urban areas undermines livability for residents.
- As Kenya urbanizes, formal housing supply is not keeping pace with the growing urban population and informal housing construction fills the gap.
- The bank points out that more than half of urban residents in Kenya currently live in informal settlements.
- High cost of food has placed pressure on housing budgets, leaving most families with no option but to live in bad housing to ease the strain.
- With such high pressure from food depending, most families commonly trade off in housing and transport.
- One example of these tradeoffs is urban resident’s willingness to live in low quality informal housing.
Land boards dissolution freezes property transfers since April
15/06/2016 :The Business Daily, Pg. 6
- Land transactions have stalled for the last two months following the disbandment of land control boards that approve leasing and sale of agricultural property.
- The institution of surveyors of Kenya (ISK) yesterday said the freeze in agricultural land transactions is also hurting other critical sectors like banking and real estate on reduced lending and property developments respectively.
- Land Cabinet Secretary Prof. Jacob Kaimenyi disbanded the boards in late April to curb widespread corruption in the sector promising they would be reconstituted in two weeks.
- The board with a membership of between seven and 12 people and traditionally chaired by district commissioners (DC) Or District Officers (DO) approve buying and selling or subdivision of agricultural land in areas under their jurisdiction.Read more
State owned banks Merger plans
11-17/06/2016 : The East African
- Kenya’s National Treasury Cabinet Secretary Henry Rotich state –owned banks will be consolidated into one or two institutions to make them stronger.
- The National Bank of Kenya, consolidaed bank and the Development bank of Kenya which are majority owned by the government, are the targets of the consolidation.
- Rotich said a consultant has been appointed and is currently working on the modalities of the consolidation.
- The expert is expected to advise the Treasury on the way forward.
To reduce crowding, Kisii county will build a new capital
16/06/2016 :The Daily Nation,DN2, Pg 2
- Kisii County has been facing an acute shortage of housing, a situation that has been blamed on the scarcity of land.
- The town has grown rapidly in the last decade, outstripping its planners’ original estimate for a population of 50,000. The town is now home to more than 200,000 people, with the number set to expand as business and investment opportunities increase.
- The cosmopolitan town has seen an explosion in real estate, with many enterprising individuals taking bank loans to build residential complexes to take advantage of the huge demand for housing.
- As a result, plans are underway to build a Sh12billion city in Kisii County on a parcel of land yet to be determined.
- The proposed city is just one of the many developments that followed the successful Entrepreneurship Summit held in Kisii Town in February.
- Governor James Ongwae has already signed the deal with a Chinese firm, Boleyn Magic Wall, which pitched for the massive project that, once complete, will change the county’s skyline.
- According to Mr Jack Liu, the firm’s managing director, the construction of the proposed ciy will take three years, and will be undertaken jointly with a local property developer, Moke Gardens.
- Mr Liu says his firm will build more than 2,000 housing units.
- Moke Gardens Chief Executive Officer Mr Harun Nyamboki concurs, says they are “well oiled” and will build the city in three years, given that they will use precast building technology.
- He noted said that technology has an added advantage since it does not require plastering, formworks, wooden works or scaffolding.
- Also to be included in the envisioned city are modern residential apartments, office buildings, shopping malls, kindergartens, schools, a health centre, and a city hall, among other facilities.
Bamburi to lock in buyers with customized houses
16/06/2016 : The Daily Nation, DN2 Page 3
- Cement manufacturing firm Bamburi plans to lock in buyers with an offer of customized house models and technical support during construction.
- The firm has done cost estimates and developed 30 architectural designs for different home sizes that average between Ksh 500,000 and Ksh 5.2 million to complete.
- The package, solely for residential homes – bungalows maisonettes and incremental houses – known as maskan, will see bamburi partner with lenders and local distributors to fund the construction without disbursing money directly to the clients to tie them to their product. Bamburi will give customers a bill of quantities for their specific choice and then connect them with the company’s local distributor, who will provide all the materials.
- Bamburi is currently engaged in consultation with two banks and three microfinance institutions to act as their official lender for the project.
Chinese firm seeking government partnership help alleviate housing shortage
16/06/2016 :The Daily Nation,DN2 Page 3
- A Chinese firm, CAD fund is looking to partner with the government in funding housing development in the country to bridge the current shortfall or more than 200,000 units.
- Cad fund committed to invest in a number of housing projects and provide capital for the same during a meeting with treasury, Cabinet secretary James Macharia.
- CAD fund is a nine year, Africa focused equity investment fund launched by the Chinese government.
- Aon the projects fow which the government is seeking partnership with CAD fund is the proposed Ngara city, which is being undertaken by the Chinese contractor. Apart from the agreement with the government, CAD fund has also made forays into the private housing development sector, where it has partnered with the Suraya Property Group and Chinese contractor China Construction Engineering Consultant Corporation (CCECC) to develop 20,000 new houses for the police service.
Levies waiver gives developers reprieve.
16/06/2016 : The Daily Nation, DN2 Page 4
- Developers are set for a reprieve after the treasury waived levies demanded by the sector regulator and the environment watchdog.
- The National environment management Authority (NEMA) currently charges a minimum assessment fee of a Ksh 10,000 or 0.1% of project cost, without an upper limit.
- Nema requires projects such as mineral processing, oil drilling, infrastructure development, real estate and waste disposal to be licensed before they are implemented.
- Developers whose project exceeds Ksh 5 million also pay a levy 0.5% of the value of the contract to the National construction Authority before they can start working.
- County governments, which have a variety of charges like the construction permit, will also be tamed, according to Treasury Cabinet Secretary Henry Rotich.
City hall to let go of another prime Estate.
03/06/2016 :The Business Daily, pg.6
- City hall is planning to hand over another of its prime estates to a pension scheme as part of the county government’s plan to reduce its Ksh 45 billion debt.
- The county debt management strategy paper indicates that the city government has entered into negotiations with Local Authorities pension Trust. (Laptrust) for the transfer to cover the amount it owes.
- This is its second such transaction, with the county government, having transferred Mariakani Estate to the Local Authorities Pension Fund (Lapfund) In early 2013, a deal that has since been challenged in court.
- The county owns tens of estates, with the most featuring dilapidated houses that are ripe for the re-development.
- The estates are occupied by the county employees or those they have let them out to at rents below the market rates, arrangements that might be upset by the new landlords.
A six – storey block of flats targeting long stay visitors coming to Thika Road soon
03/06/2016 : The Daily Nation
- A local investor has launched a Ksh 1.7 billion services apartment project along Thika road as units targeting guests who stay for long periods become increasingly popular with developers.
- The six storey development, known as Vintage mall, will house 90 services apartments and a four star hotel and will be built on two acres next to Uchumi Jipange and about 100 metres from Garden City Mall.
- The project will also have a supermarket, a movie theatre, restaurants and line shops on the first two floors.
- The apartments will be sold to investors on a sale and leaseback arrangement and will be managed by the hotel’s operator on behalf of the owners.
Hemingways to build boutique hotel and luxury apartments
16/06/2016 :The standard,Home and Away, Pg. 2
- In an effort to diversify its hospitality brand, Hemingways Collection plans to put up a 39-room boutique hotel on the same site where the present 74-room hotel stands.
- The new development will entail the tearing down of part of the current wings of the hotel. In addition to the new hotel, the redesign will also see the erection of 15 luxury apartments.
- The project will cost $9 million (Sh900 million) and will be completed by July 2017, with a soft opening of the hotel slated for February 2018.
- According to the group’s chairman Richard Evans, the construction of the boutique hotel is meant to bring the standards of the coastal development closer to those of the group’s flagship project in the city, Hemingways Nairobi. “This is one of the largest projects along the Coast in recent times. We must continue to cast a positive image of Watamu in view of recent decline in the tourism industry,” said Evans.Read more
Use modern technology, government tells developers.
16/06/2016 :The standard, Home and away, Pg. 6
- While develpers have queried the rationale behind treasury Cabinet Secretary corporate tax incentive, the housing department insists the country should be suffering from acute housing shortage “if we use modern technology”
- According to housing PS Aidah Munano, use of alternative building technologies and materials can significantly lower the cost of housing.
- Such technologies are being used to construct police housing units on 15 pilot projects across the country.
- With the use of expanded polyrethrene that is superior to bricks.
- Even without columns and beams, such houses can go up to five levels.
The real estate sector continues to grow, with Helios Investment Partners announcing that it has set up a real estate unit that will manage property owned by Telkom Kenya, estimated to be worth Kshs. 13.0 bn
19/06/2016 : Cytonn Weekly Report no. 24
On Tuesday, Helios Investment Partners announced that it had set up a real estate unit that will manage the properties owned by Telkom Kenya, estimated to be worth Kshs 13 bn. The company has reorganized its business structure into four business divisions: mobile, fixed telephone, wholesale and real estate though it is not clear how the real estate division will operate. The Investors Information report indicates that Telkom has 335 properties priced at Kshs 9.4bn, including 39.1 ha of land, 11 residential buildings, a sports club and offices along Nairobi’s Ngong road. Helios is a UK private equity firm that is looking for attractive investment opportunities in Africa. It currently holds a 70% stake in Telkom. Investment in real estate by Telkom Kenya, a telecommunications operator, accentuates companies in Kenya that have diversified from their main business lines into real estate to boost earnings.Read more