MIP WEEKLY CONSTRUCTION INDUSTRY REPORT NO. 37
PERIOD: MAY 2 to 8, 2016
200 city buildings condemned
03/05/2016 : The standard, Page 6-7
03/05/2016 : The Daily Nation, Page 6
05/05/2016 : The daily Nation Page 10-11
- 200 city buildings, including 50 in Huruma estate in Nairobi, were condemned in a recent audit by the government. Buildings deemed to be dangerous to live in, that included the ill-fated Huruma block were enmarked for demolition after a physical inspection suggested they were faulty.
- A five-storey building in Dagoretti corner was marked for demolition one year ago ,but construction of 2 more floors is ongoing this month. The matter was still pending in court.
- The Nairobi county government will demolish 20 high risk houses built on river banks, following the heavy down pour. Houses have been identified in Huruma, Mathare, Embakasi, Pipeline and Githurai.
- The reasons why building collapse include ; bad design, faulty construction/bad workmanship, foundation failure, extra ordinary loads, man-made vibrations, natural catastrophes (e.g earthquakes), man induced catastrophes (like bombing).
History of collapsed buildings and walls
- April28,2016: A wall collapses in Lenana road
- March 09,2016: A 4-storey building in Zimmerman collapses, whose construction was questioned for 2 years
- May11,2015:A perimeter wall at South B Mosque collapses due to heavy rains
- April 2,2015: A building collapses behind Thika Road Mall in Roysambu
- Jan 4,2015: A residential building collapses at Huruma estate
- Dec 17,2014: A 5 storey building which was still under construction but partly occupied collapsed in Kaloleni
- June 2,2012: A building under construction collapses in Mlolongo
- September 17,2011: A 3 storey building collapses during heavy rainfall in Mabona , Vihiga county
- June 14,2011: A 6 storey building under construction collapses in Nairobi
- Jan 10,2010: A building in Kiambu town collapses due to heavy rains
- Jan 2006: A 5 storey building under construction in Ronald Ngala collapses.Read more
Nairobi county MCAs want Sh1bn city buildings be demolished over safety
05/05/2016 : The Standard, Page 4-5
05/05/2016 : The Daily Nation Page 22
- MCAs approved a report by the County Planning and Housing Committee that recommended the demolition of a five-storey building at Mbagathi road-Langata road round about, four-storey building in Westlands and another in Gigiri, Karura
- The Mbagathi building is accused of causing floods along Mbagathi road and has already developed cracks on the walls yet it is nearing completion. The reps say that it has a pool of water on the lower floor that is not draining. In addition, the building is said to have obstructed the free flow of Ngong River causing serious floods in the surrounding areas which poses a danger to residents and motorists.
Economic survey 2015
04/05/2016 : The Business Daily, Page 1,2, 4
: The Daily Nation, Page 8-9
: The Standard, Page 6-7
- The economic survey 2015 showed that GDP growth in 2015 was 5.6% compared to 5.3 % growth in 2014, creating 841,600 new jobs. Private companies accounted for 71 per cent or 90,880 of the total new formal jobs – including self employment.
- Building and construction industry kept its position as the most robust sector of the economy, growing at a rate of 13.6 per cent. This is because 5.2 million tons of cement were consumed and the banks loaned the sector Sh.106.4 billion. The real estate sector, measured in terms of rent earnings, expanded by 8.9 per cent compared to 8.5 per cent recorded in 2014.
- Construction of the Standard Gauge Railway(SGR) in Mombasa was the largest contributor of economic growth in 2015.The project and other road projects around the country helped increase jobs by 15,00, data from the Kenya National Bureau of Statistics(KNBS).
City hall, NCA still to act on rogue builders
05/05/2016 : The Daily Nation, Page 46 and 43
- The NCC and the NCA are said not to have affected the recommendations that followed an audit ordered by the president last year. The audit chaired by Mr Moses Nyakiangora of lands ministry reported that, of the 2,035 buildings inspected, only 64% had the required structural standards while the rest required “further scientific investigation with a view of strengthening them and those that cannot be strengthened be immediately demolished.”
- It covered most parts of Eastlands, Dagoretti , Kasaranj , Zimmerman, Roysambu, Githurai 44 and 45, Garden Estate, Thome and Kilimani.
- Among the recommendations were ;the evacuation of residents from buildings which have shown structural failure and are classified as dangerous even before structural tests are done, all buildings to be connected to sewer lines, and that structures encroaching on road reserves and drainage way leaves be removed.
- Notably, the report categorized Huruma as a high risk area due to its observable poor settlement and developed framework, which has led to high deterioration of safety standards in the area.
- The NCA chair, Mr. Oundo says, that a similar building to the collapsed in Huruma estate would cost between sh8-10 million to demolish with the help of a specialized contractor to oversee the whole project.
- Failure to effect the recommendations has put City Hall and the NCA on the spot.Read more
Crown paints recorded sh216m profit last year
05/05/2016: The Daily Nation, Page 42
- Paint manufacturers Crown Paints has registered 43% growth in pretax profit to record sh216m for the year ended December 2015 despite the exchange loss of sh265m.
- The profit is an improvement from the sh151m it recorded in 2014. The growth was attributed to the growth in the construction industry.
Another Skyscrapper for Kilimani
05/05/2016 : The Daily Nation, Pg.42
- Chinese investors have started a sh1.8b serviced apartment project in Kilimani, Nairobi to tap into the growing number of business travelers and tourists.
- The 11-storey Soho apartments will be on Kirichwa Road and is targeting non-governmental organizations, embassy and multinational workers visiting Kenya for periods of between 3 and 12 months.
- According to Cytonn Investments, serviced apartments are becoming more popular due to their home feel ,convenience and their relatively lower costs compared to hotels
- Kilimani this year is expected to have 252 new serviced apartments.
Express Kenya to build 224 houses in real estate venture
05/05/2016 :The Daily Nation, Pg.43
- The logistics firm will spend sh2b on 224 residential houses in Industrial Area as the 1st phase of its diversification into real estate begins.
- The company says that the houses will be built on 3.5 acres and are expected to be completed in 2 years. In total, it plans to construct 1,200 residential houses on the land measuring 15.75 acres
State to regulate construction works after Huruma tragedy
06/05/2016 : The Standard, Page 5
- The government will review the entire legal process in construction industry and also seek to consolidate the work done by the many state agencies that oversee all aspects of construction in the country.
- The Ministry of Public Works PS Paul Mwangi said,” The laws involved in construction are diverse and enforced by many agencies, which all charge levies. We are in the process of instituting a mechanism of bringing all these institutions together and introducing a one-stop shop where all these services will be offered,” speaking during a graduation of 58 architects and quantity surveyors in Nairobi.
- He also added that levies involved in the industry will be scaled down.
Diversification by listed Companies into real estate to supplement earnings from their main lines
08/05/2016 : Cytonn Weekly Report 18
- Several listed companies are diversifying into real estate to boost their earnings. This is due to a tough operating environment that has seen many of them record lower profits or losses all together. A good example is Express Kenya, which broke ground on a 15.8 acres’ project in Nairobi’s industrial area. The project will encompass 1,500 residential units and a shopping mall, to be implemented in phases over a five-year period. The first phase will be set on 3.5 acres and will comprise of 224 one, two and three bedroomed units at a project cost of Kshs 2.0 bn.
- Other listed companies that have diversified into real estate include, Eveready Kenya and Car & General. These companies have registered losses in their main business lines and thus have been attracted to the high yielding real estate sector to diversify their income streams.
- Express Kenya registered a loss of Ksh 23.3 mn for the six months ended June 2015, while Eveready shut down its Nakuru battery factory in 2014 due to unfair competition from cheap imports. Eveready plans to use the land on which the factory used to sit to construct a business park or a mall.
- many companies are diversifying their business lines into real estate sector due to:
- High returns – The real estate sector registered on average more than 20.0% in annual returns in the last 5 years as compared to the traditional investments with a 10.0% average annual return in the same period.
- Real estate hedge inflation – Rental rates and home prices rise with inflation.
- Housing demand- Currently the Kenyan housing demand is approximately 250,000 houses per annum targeting the middle and low income earners hence creating an opportunity for institutions to venture into real estate to curb it. Read more