MIP WEEKLY CONSTRUCTION INDUSTRY REPORT NO. 62
Chinese SGR operator pledges to employ up to 3,000 Kenyans
PERIOD: December 5 to 11, 2016
08/12/2016 : Business Daily, page 6
- The Chinese company that will operate business on the standard gauge railway has committed to employ up to 3,000 Kenyans when it starts commercial operations in January 2018.
- The firm will employ drivers, technicians and station operators, offering employment to those laid off by Kenya Railways when it transferred rail operation to Rift Valley Railway (RVR).
- Transport principal secretary Irungu Nyakera told MPs on Monday that the operator will start hiring between 2,000 and 3,000 Kenyans after February when the government expects to ink an operation deal with the firm.
- Kenya gave China another sweetheart deal through contracting a Chinese company to operate business on the SGR without public bidding.
- RVR, which operates the Kenya-Uganda railway, is expected to face competition from the new railway being built with Chinese financing from Mombasa to the Ugandan border.
- “They directed that the contractors for the Mombasa-Kampala section undertake operations in the interim as the two partner states build their local capacities,” read an agreement signed at the summit of East African Community heads of state.
- Kenya Railways expects the tracks for the Mombasa to Nairobi line to be ready next year and the rail opened for commercial traffic in January 2018. RVR, which operates the ageing narrow-gauge track, will be the biggest loser. Read more
Architects click on a simple idea to market real estate property
08/12/2016 : Business Daily, page 8
- An animated video of Deer Park estate in Karen has been making the rounds on the Internet.
- The development comprising 10 town houses has sold several of its Sh100 million units off-plan through the clip uploaded on YouTube.
- The virtual tour of the houses starts with an aerial 360 degrees view of the project area and suburb, followed by a drive through the gated community, giving the viewer a feel of what to expect as you enter the estate.
- Walk through the living room, or step into the bedroom in real time—the video takes you through the front door into every single room before moving outside to the pool area and gardens. Every intricate detail inside and outside the house is shown.
- Jonathan Chirchir and Ancent Odindo are the minds behind this virtual tour of the Karen development through their company —Vertex Studios.
- Both graduates of architecture from the University of Nairobi, the two were intrigued by how the real estate sector is changing from plain architectural drawings to 3D renderings and animation and started the company that solely works on interior and exterior visualisation of property, walk-throughs, 3D plans and scaled models
- The duo says demand is high for architectural animation in Kenya as developers have identified the value-added benefit it gives when marketing a property.
- “Previously many would get these services from companies outside the country, which gave us a leeway to start the business that focuses on architectural visualisation,” says Mr Chirchir.
- Most of their projects are off plan; however they still have on-site projects and buildings which need architectural visualisation.
- “Investors want to have a feel of what the house looks like on the inside and the outside and getting a visual walk through into the house is the best marketing strategy for real estate developers,” says Mr Odindo, adding that potential buyers want to see all the features of the home.
- Eddy Matu a photographer with 360 Tours, the company behind the Green Park and English Point Marina virtual tours says the trend in real estate sector is big as more developers seek to market their properties to a wider audience.
- “Most developers are using them in housing expos and sending links to people in the diaspora,” he says
- Mr Matu says unlike still photography, virtual tours show all aspects of the house as well as a 360 view of the house through the hot spots and navigation arrows.
- Companies doing the virtual tours work with interior designers to bring out the best images of the house, including interior design, fittings inside the house as well as lighting.Read more
Finnish fund Taaleri to invest Sh10bn in East, S.African property market
08/12/2016 : Business Daily, page 19
- Finnish private equity fund and financial services group Taaleri Plc plans to invest Sh10 billion ($100 million) in East and South African real estate projects.
- Taaleri, in partnership with local private equity firm Cytonn Investments, has so far invested about Sh4 billion in the Kenyan real-estate market.
- The two companies are exploring more investment opportunities in both real estate and renewable energy sectors.
- “East Africa is the area where we have been active. There are tremendous opportunities in the region. We started with about $50 million with the first fund. We are going to raise new funds, double the first funds, by beginning of next year,” said Taaleri Plc chief executive Juhani Elomaa.
- Mr Elomaa also announced the firm was considering venturing into regional green energy projects from early next year. The two firms have projects in Nairobi, Kiambu and Meru counties.
- They invested Sh1 billion in Amara Ridge, a high-end residential development in Karen, Nairobi. It sits on five acres and consists of 10 five-bedroom houses, each of which had a sale price of Sh95 million.
- Cytonn has also ventured into other areas including the fast-growing middle income town of Ruaka on the outskirts of Nairobi where it is building 400 units in a gated community at Sh2.5 billion.
- The project is scheduled for completion within three years and targets middle- to lower-income earners looking for modern apartments.Read more
UAP Old Mutual bets on holiday fever to drive up home insurance cover sales
08/12/2016 : Business Daily, page 19
- Underwriter UAP Old Mutual Group is banking on home insurance covers during the festive travel rush to drive up premium sales.
- UAP Old Mutual General Insurance managing director James Wambugu says his firm will target homeowners keen on preventing holiday-related disasters by protecting their homes from losses linked to break-ins, burst piping and overflowing water among other perils.
- “Most people go on holiday around this period, leaving their houses vacant, which increases the likelihood of burglaries.
- “Additionally homeowners face potential losses from leaked pipes and other accidents since they are not present to take immediate action when such disasters occur,” said Mr Wambugu.
- “The covers are also meant to offer protection against fires, riots, injuries and illness to domestic staff.”
- The yearly Christmas rush is marked by mass travel upcountry or to holiday destinations. Most Kenyans leave their homes unattended, exposing them to risk of burglary and theft.
- Mr Wambugu also expects interest in the travel insurance products to peak around this period.Read more
Kiambu plan approvals to take 30 days or less
The standard : Home and away. Pg 2
- Building approvals in Kiambu have gone online, cutting the waiting time from at least three months to a maximum of 30 days.
- The county late last month launched the Electronic Development Applications Management System(E-DAMS), which will be used to guide development and quicken application processes.
- It will take 14 days to approve domestic houses or single dwelling houses while major commercial projects will take a maximum of 30 days. Approvals used to take at least three months before
- “Kiambu is the fastest urbanising county in Kenya. We need to control such a growth so that we don’t become a slum in the next 20 to 30 years,” said David Gatimu, the Lands and Physical Planning chief officer.
- Kiambu County Governor William Kabogo said he was happy about the online platform, which took about six months to develop. “Even if it will render many of our untrained and non-registered people in the sector jobless, the benefits, which includes taming corruption in the ministry, far outweigh the negatives by far,” said Kabogo.
- The platform will allow online submission of building proposals by architects and planners for evaluation and approval and automatically manages workflow to allow applications to be routed concurrently to the various technical evaluators.
- Land, Housing and Physical Planning chief executive Eunice Kumunga said the online system is a milestone for the county and would go a long way in ensuring that building and construction industry services are done fast, cost-effectively and efficiently.
- In addition, the system will help in the issuance of development permits, profiling of ongoing developments for inspection process, support for the planning enforcement process and data collection on inspections and archiving of all data.
- In March 2016, the County of Kiambu signed a Cooperation Agreement with the World Bank Group’s Kenya Investment Climate Programme 2 to design, test and deploy e-DAMS. World Bank has also supported the implementation of electronic construction permits in Nairobi, Mombasa and Kisumu counties.Read more
Kaimenyi pushes for enactment of planning law
The standard : Home and away. Pg 2
- Lands cabinet SecretaryProf Jacob Kaimenyi has appealed to both the senate and National assembly to fast track the enactment of the Physical planning Act bill which is currently before parliament.
- The national Spatial plan (NSP) has been prepared in fulfillment of the Kenya Vision 2030, which idntified the plan as a flagship project in laying the foundation for social – economic transformation for the country.
- NSP denies land that consitutes Kenya’s entire territory including territorial sea, economic zones and sea bed.
Vipingo golf estate scores a first in Africa
The standard : Home and away. Pg 4
- Kilifi County is home to one of the most prestigious golf courses in Kenya. Yet, in its brief existence, the 18-hole Baobab Golf Course at Vipingo Ridge has attained what no other courses in Africa has. In October, the golf course attained the Professional Golfers Association (PGA) status.
- It is a first for Africa. A PGA status means that Vipingo is now on the world’s top golfers’ radar. But Vipingo is a paradox of sorts. Recently, I perused a coffee table book on African golf courses in South Africa, another country famed for its serene courses.
- Nowhere did Vipingo Ridge feature. Whether it was by default or design, I can’t tell. But it was not fair, or so I thought
- Located at the hot and humid north Coast, Vipingo may attract the typical nuances of an unbearable course. To any observer, its location on top of a hill makes it a direct recipient of the heat waves of the equatorial sun. Yet, the cool breeze coming out of the ocean and gently lapping the hillside dispels such notions.
- But Vipingo’s repute as an international golfing destination would not be complete without mentioning the multi-million-shilling homes woven around the course.
- Having to swing and tee off towards any of the mansions must be a nerve-wrecking experience for any player, pro and amateur alike. Yet, a golf course of international repute is as good as its designer.
- For Vipingo Ridge, this is David Jones, a man who has had previous experience designing other world-class courses, including the Antalya Golf Course in Turkey, another PGA flagship project. Prior to this, Jones launched his career by designing the picturesque Killarney Golf Club in Ireland.
- He terms it as one of the toughest courses in Europe. He should know this, himself being an accomplished player. In Kenya, Jones is also behind the design of Aberdare Hills Golf Resort near Naivasha.
- With its ancient trees and shrubs, tall cliffs and deep river ravines, Jones described the scene then as taken straight out of the plateaus of Jurassic Park “except instead of dinosaurs we had buffalo”.
- For Vipingo, Jones had his ingredients laid out – a nearby freshwater lake and 2,500 acres of Africa from which to carve out a modern golf course.Read more
Kenyan steel firm earns Sh400m from SGR supplies
07/12/2016 : Business Daily, page 7
- Kenyan manufacturer Tononoka Steel says it has earned Sh400 million from the supply of metal to the standard gauge railway project.
- The firm is a division of Tononoka Group of Companies owned by Kenyan billionaire industrialist Navin Savla.
- “We have supplied 6,000 tonnes of steel worth over Sh400 million to date,” said Tononoka Steel chief executive officer Mahesh Pathak in an interview.
- According to the Tononoka Group chief executive Rajagopalan Sathyamoorthy, the mandatory local quota for Kenyan suppliers has boosted the steel manufacturer’s fortunes coming at a time when steel makers in the country are battling the impact of downgraded prices globally. “This has been a boon for us,” said Mr Sathyamoorthy at the firm’s Dandora steel plant in Nairobi.
- The new standard gauge railway is expected to ease transport of goods and people from Mombasa to Nairobi, and later on to the Malaba border and onwards to Kampala.
- The Sh327 billion Mombasa to Nairobi SGR section being built by China Road and Bridge Corporation (CRBC) is set for completion by end of June next year.
- Reports earlier this year that foreign suppliers had received Sh167 billion from the SGR project implied that only a small share had gone to local firms, prompting President Uhuru Kenyatta to fault the Chinese contractor for failing to honour an agreement to buy up to 40 per cent of materials and services locally.
- Four other Kenyan steel manufacturers which are also supplying the Chinese contractor include Devki Group, Apex, Steel Makers and Prime Steel.
- Tononoka Steel says it hopes to make more money in the second phase which covers the Nairobi to Naivasha section and whose construction is underway.
- The 120km stretch is expected to consume large volumes of steel and other raw materials with its 74 bridges and seven tunnels in the rugged Rift Valley terrain.
- To deal with projected increased demand Tononoka Steel, whose market has primarily been driven by the local construction industry, has set aside Sh2 billion for expansion of its factory.
- The manufacturer produces steel bars from industrial scrap. It has bought a 12-acre piece of land to upgrade its production capacity.
- Its plant, bought from Citi Engineering in 2005, employs 500 workers.
- “We hope to complete the new plant by end of 2017, which will allow us to upscale our production from 250 tonnes per day to about 600 tonnes,” said Mr Sathyamoorthy.
- “The new plant will also employ an additional 300 taking our group staff total to 1300.”
- The firm has another plant in Embakasi. Steel rails are not produced locally and hence local firms are supplying steel for bridges and civil works such as culverts.
- Earlier, CRBC raised questions on the quality of locally made steel, a factor which it noted had seen most players lose out on supply contracts.Read more
Best Western opens high-end serviced apartments in Nairobi
07/12/2016 : Business Daily, page 7
- Global hospitality operator Best Western has opened its first African high-end serviced apartments in Nairobi that caters to business executives and billionaires.
- Best Western Hotels & Resorts senior vice-president of international operations Suzi Yoder said the executive residency is a new introduction in the hotel chain’s brands, which provides longer-term accommodations to business and leisure travellers.
- “The latest addition to the Best Western Hotels & Resorts portfolio solidifies our presence in Kenya, which continues to witness increased synonymous growth on tourists and business travellers,” she said.
- The one- and two-bedroomed property on Riverside Drive is Best Western’s third facility in Nairobi, signalling clients’ interest in the city as a business hub for the larger East African region.
- The five-storey building provides long and short-term visitors with 48 non-smoking one- and two-bedroom apartments that include a kitchen, dining room, living room, high speed Internet access, flat screen TV, work desk area and daily housekeeping services.
- The facility has pushed up a notch higher the competition for serviced apartments as Best Western will recommend its own facility to clients from across the 100 countries where it operates 4,100 outlets.
- It provides a fitness centre and an indoor heated swimming pool.
- The facility developed by Fedha Group seeks to fill the gap for serviced apartments for clients who prefer own meals within a home environment.Read more
Fusion capital Sh 4bn Rwanda Property open for business
07/12/2016 : Business Daily, page 10
- Kenyan private equity firm fusion capital has completed its mixed -use devcelopment project in Rwanda at a cost of Ksh 4 Billion.
- The 30,000 square -metres structure known as Kigali heights was officially opened for business by Rwanda President Paul kagame on Monday.
- “THis project is following through on what the struggle was about, a developed and prosperous Rwanda,” said Mr.Kagame
- The development consists of a nine- storey block along the boulevard frontage and a six storey block that faces the kimihurura Roundabout in Gasabo district opposite Kifgali convention Centre.
- It has attracted both international and local players sector and retail industry such as supermarkets chains, restaurants chains, clothing stores and food chains.
- Full occupancy is expected by the end quater one 2017 according to the PE fund.
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.
09/12/2016 : 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 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.Read more