MIP WEEKLY CONSTRUCTION INDUSTRY REPORT NO. 35
PERIOD : APRIL 18 to 24, 2016
Mt Kenya holiday homes inks Ksh 7bn Naromoru resort deal
18/04/2016 : The Business daily, Page 18
- Mt Kenya Holiday homes signed a deal with Swiss International hotels & resorts to co- develop a $70 million (ksh 7 billion) five star resort with 281 villas, townhouses, apartments and all en suite hotel at Narumoru near mount Kenya.
- Swiss International Resort is developing and offering the homes for sale to individual owners and also made available by fractional ownership.
- Swiss International will manage the entire resort.
Residents in Ksh 1 Billion housing sale deal now cry foul
18/04/2016 : The Standard, Page 9.
- Residents who bought housing units for Ksh 20 Million each from developers in Kiambu have accused them of a raw deal.
- The residents of Red Hill Estate in Ndenderu have lamented that they have been forced to incur costs of up to Ksh 500,000 each on repairs as some bits of their houses are falling apart due to sub-standard construction materials.
- Apart from drilling a borehole on their own as the estate has no piped water- despite the fact that the contractors promised running water, some residents were forced to put up perimeter walls, fence their homes and dig trenches to solve the problem of storm water.
Rising satellite towns drive down land prices in Nairobi
19/04/2016 : The Business Daily, Page 19
19/04/2016 : The Daily Nation, Page 36
- Nairobi land prices dropped for the first time in the first three months of 2016 even as that for satellite towns rose, according to Hass consult property index.
- The land value in Nairobi suburbs including Eastleigh, Gigiri, Muthaiga, Parklands and langata, fell marginally by 0.2 % between January and March 2016 due to a shift by land investors to satellite towns. Hass confirmed it was the first time the price dropped since it started the survey in 2009.
- Hass report said the rise in land price in satellite towns was driven by the investment in infrastructure by county and national governments as well as the lower land prices than in the city suburbs.
- Athi River, Ruaka and Ruiru are some of the satellite cities beginning to attract large scale residential and retail development.Read more
E-commerce drives increasing demand for warehouses
20/04/2016 : The business Daily, Page 16-17
- Demand for warehouses is set to increase as the number of companies setting base in Kenya keeps growing.
- According to Attitude survey by Knight Frank, a property management company, more resources will be put into warehouses and logistics and the sector may end up as the preferred investment option, overtaking shopping sectors and high street retail shop.
- According to the Report “warehousing and logistics sector grew by 24% over the last 10 years in Africa and given another decade it will experience a 41% growth.”
- Developers are diversifying into Industrial property because they are cheaper to construct as they also move away from the increasingly tight commercial and luxury space segments.Read more
50 PC drop in mall tenancy signals retail space glut
20/04/2016 : The Business Daily, Page 20
- Uptake of tenancy in malls fell by nearly one half last year confirming fears that formal retail space is oversupplied.
- According to the 2015 market update by Knight Frank most retailers were in wait and see mode as they sought to assess performance of new premises.
- The market is worried that floor space is not selling as fast as anticipated with some malls running empty stalls as some owners opt to occupy huge chunks with their own business.
- In further bad news, the update indicated that decisions by Oil companies to pull out on tough operating environments coupled with end of government commission tenures have taken a shine off Office space segment.Read more
Shelter Afrique to provide cheap loans
21/04/2016 : The Daily Nation, Page 46
- Pan African housing lender Shelter Afrique has signed a Ksh 100 million credit agreement with local financial services firm Molyn Credit for lending to low income households.
- Shelter Afrique Managing director, James Mugerwa said service will target those earning less than Ksh100,000 a month
- The credit Facility has a seven year tenure.
- Beneficiaries will have access to individual loans not exceeding Ksh 2 Million.
- Mugerwa said many Kenyans cannot own their homes due to lack of access to cheap credit.
- The loans will be available to the lower to middle income people who want to acquire affordable homes or to improve their homes.
Another Skyscrapper to be built in Upper Hill
21/04/2016 : The Daily Nation, Page 48
- Upper Hill is set to host a new 35 storey mixed use development, adding to the many skyscrapers coming up in the area.
- The expansive building will be built at the junction of Haile Selassie Avenue and Lower Hill Road on a 3.5 acre piece of land that was bought from the Kenya Railways Corporation.
- A large part of the area is currently covered by huge Eucalyptus trees, some of which will be cleared to make way for the Ksh 5.5 billion project by Greenfield Developers.
- The Proposed development will mainly comprise of office space, retail space, apartments, serviced apartments, a hotel retail parking and associated ancillary facilities within the proposed plot.
- The EIA does not give detailed plans of the layout, but an artistic impression of the project shows it will have two towers.
- In addition, there will be six basement levels for parking, with about 1,320 parking bays.
Portland seeks government partnership in housing project
21/04/2016 : The Standard, Home and Away, Page 2
- The East African Portland Cement company is looking at partnering with the government top up to build low cost houses in Athi River.
- This is in an effort to raise revenue through housing, after plans to dispose of its 1300 acres of exhausted land were not approved.
- Speaking during the launch of the 23rd Kenya homes Expo, the company’s COO Albert Sigei told Lands CS Prof Jacob Kaimenyi that the company had enough land for such a venture.
The real estate sector records Q1 in 2016.
24/04/2016: Cytonn Weekly Report No.16
- The residential market has managed to remain the most attractive real estate segment and this is supported by findings announced during the release of reports by Knight Frank and Hass Consult. Over the last five years, Real Estate has continued to be the most preferred investment option among individuals and investors owing to the fact that it has higher returns at approximately 25% per annum total returns, in comparison to other asset classes that give returns of averagely 14% per annum.
- The high returns for residential property can be attributed to high housing demand and housing deficits, which are propelled by the increasing urbanisation rates far outpacing the rate of supply.
- Property prices for residential units have continued to increase particularly for semi-detached houses whose asking rent have increased by 17.1% as indicated by the Hass Consult Pricing Index.
- According to the Hass Consult House Price Index, house prices on the other hand increased by 4.2% for the quarter and 14.6% over the year which is the highest increase in the past 5 years. Lang’ata, Karen and Athi River experienced the highest house price increase at 5.4%, 5.2% and 4.9%, respectively. Rental prices increased by 1.5% for the first quarter and 5.5% for the year with Westlands having a rental decline of 2.5% for Q1 2016 and a 0.8% decline for the year.
- The commercial office market on the other hand has posted a modest decline with the occupancy of Grade A office space decreasing by 5% in the 2nd half of 2015 as compared to the preceding 1st half. The report by Knight Frank further indicates that this is a 40% decline as compared to a similar period in 2014. The absorption rates for office space could dip further following external shocks in international markets particularly the oil and gas industry which has reduced the number of investment offices coming and reduced activities of government agencies.
- The players in the oil and gas industry are seeking to downsize their operations and pull out of Kenya altogether. Government institutions who also take up a considerable amount of Grade A office space may not require it by the end of the year. The Transitional Authority and Constitutional Implementation Committee (CIC) are some of the agencies whose terms come to an end this year if their tenures are not reviewed.
- The foreseen poor performance has however not been reflected in the rental asking prices which remained relatively stable throughout 2015. Read more