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4-Star Hotel

Centum Real estate has finally floated its Ksh 4 million housing bond that was announced more than two weeks ago. 

The purpose of the floatation is to finance the ongoing construction of its affordable, middle-income, and high-end housing projects in Kenya. Centum floated&nbsp;the&nbsp;paper on November 13 following regulatory approval by the Capital Markets Authority (CMA) and is set to close on December 2. 

Centum Real Estate Managing Director Samuel Kariuki said the bond offers an opportunity for investors to get a piece of Kenya&rsquo;s real estate pie without taking the risk of getting involved in the actual development of the projects. 

The <a href="https://centumre.co.ke/" style="color: #ff6600;">company</a> had earlier said the bond will not reflect on the books of the parent company, Centum Investment. 

The paper is a 3-year, zero-coupon bond issued at a discount rate on the 3-year Treasury bond, plus a market-determined margin. Centum Real Estate is developing a number of affordable, middle-income, and high-end housing in Ruaka and Kasarani as well as Two Rivers. 

The company said if the bond is oversubscribed, Centum Real Estate will have the greenshoe option of taking up to Ksh2 billion more based on its strong balance sheet (Ksh. 35 billion). 

Centum Real Estate plans to list the paper on the Nairobi Securities Exchange after the ongoing private placement. Investors who purchase the bond will have the option of investing in an equity-linked component.

The building construction industry in Kenya is expected to record a Compounded Annual Growth Rate (CAGR) of 6.1% to reach Ksh. 604.3 billion by 2024 according to research.

A report by <a style="color: #ff6600;" href="https://www.researchandmarkets.com/reports/5006011/kenya-building-construction-industry-databook?utm_source=dynamic&amp;utm_medium=CI&amp;utm_code=2p6sdm&amp;utm_campaign=1365744+-+Outlook+on+Kenya%27s+Building+Construction+Industry+to+2024%3b+Covering+30%2b+Segments+in+Residential%2c+Commercial%2c+Industrial+and+Institutional+Construction+Sectors&amp;utm_exec=joca220cid">Research and Markets</a> research estimates that the value of the commercial building construction market will record a CAGR of 6.5% over the forecast period. In addition, it estimates that the residential construction industry increased in value at a CAGR of 9.0% during the period from 2015 to 2019.

The data-centric report provides data and trend analyses on building construction industry in Kenya, with over 80 key performance indices (KPIs). It details market size &amp; forecast, emerging trends, market opportunities, and investment risks in over 30 segments in residential, commercial, industrial and institutional construction sectors.

Kenyan property markets have in recent months undergone a lot of constraints ranging from unfavorable economic circumstances, demand-supply mismatch and credit issues pre-corona virus crisis.

With the prevailing negative market sentiments, and expected lay-offs that some companies have already <a style="color: #ff6600;" href="https://www.youtube.com/watch?v=--5SRt6z6kY">set in motion</a>, it is not yet clear when the coasts will clear but the short-term outlook remains dim for property markets in general.

With the persistent glut in high-end markets and a <a style="color: #ff6600;" href="https://www.businessdailyafrica.com/datahub/Alarm-as-poverty-levels-in-Kenya-on-the-rise-again/3815418-5493254-12aoshaz/index.html">weakened purchasing power</a>, property developers and other real estate market players will need to transition into more efficient operations namely the use of data and other available technologies going forward.

Beyond the COVID-19 cloud, the country’s massive affordable housing deficit still remains unmet, and demand from the lower-income market segment is expected to grow in the short-term.

Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/tips-for-realtors-and-agents-on-dealing-with-coronavirus-fears/">Tips for realtors and agents on dealing with coronavirus fears</a>

Kenya&rsquo;s property taxes contracted by Ksh. 213 million in the first quarter of the current financial year according to the national treasury.

Property taxes received by the Kenya Revenue Authority (KRA) in the period from July to September this year totalled Ksh. 3.53 billion, a 5.68 per cent drop compared to Ksh. 3.75 collected during the same period last year.

The decline has been attributed to a general slump in demand on the back of Covid-19 including pre-Covid 19 economic fractures and consequent income constraints for businesses and individuals.

KRA&rsquo;s tax cut on property transfer transactions includes a 5 per cent&nbsp;<a href="https://www.kra.go.ke/en/individual/filing-paying/types-of-taxes/capital-gains-tax" style="color: #ff6600;">capital gains tax</a> charged on net gains payable by the seller and a 4 per cent stamp duty on the same property&rsquo;s market value payable by the buyer.

Rental property is taxable at 10 percent of gross rental income for landlords whose annual rental income exceeds a certain threshold income with an option to opt for ordinary corporate tax.

In Kenya, property taxes form a major component of the government&rsquo;s revenue streams, with the taxman targeting to raise Ksh. 17.34 billion in the current financial year, a per cent increase from the Ksh. 11.71 billion collected in the previous financial year.

Among other measures undertaken by Treasury to increase property revenue include the recent regulations gazettement of regulations allowing the Chief Government valuer to appoint private valuers by Treasury CS Ukur Yattani.

The Stamp Duty (Valuation of Immovable Property) 2020 allows buyers of property the choice to use government valuers or approved private practitioners in transactions.

The move will help the government undertake more property valuations, reducing the routine backlog which is usually responsible for delayed property transfers.

These advantages are expected to boost the government&rsquo;s property tax receipts by the end of this financial year.&nbsp;

Property Taxes Drop as Government Targets Higher Property Revenues

Africa’s growing middle class, and the continuous expansion of its consumer segments in recent years has led to an increase in demand for logistics property. Over the past few years most retailers and manufacturers have made efforts to expand their operations to fit the growing demand although a supply gap still remains. More than the available facilities, occupiers are now looking for high technical specifications that support modern retailing, distribution and manufacturing practices.

The Logistics Africa Report by Knight Frank explains that, recent activity by developers and investors have largely focused on retail and office space leaving behind logistics property. However, there has been some progress since some players like Actis and RMB Westport have taken initiative to boost logistics projects in Sub-Saharan Africa. As with most other commercial property, South Africa hosts some of the largest and most sophisticated logistics property in Sub-Saharan Africa. With that wealth of experience, South African developers are currently seeking to diffuse their expertise into the rest of the continent.

Traffic congestion within most African large cities have impacted logistical operations leading to many logistical property developers to consider locating their facilities outside the busy city centres. Additionally, inland dry ports have become a very viable option as a result of sea port congestion and competition for limited warehouse space around those areas.

Major logistics market drivers between 2015 and 2016 include the growing middle class and consumer spending, mineral and resource demand, new oil and gas discoveries, rapid infrastructure development, stronger agricultural demand and increased FDI. Furthermore, the growth of online retail markets has the potential to exert major changes in the demand and supply of logistics property in Africa. The e-commerce market in Africa is already projected to reach US$50 billion by 2018 with pioneers such as Jumia and Konga in Nigeria, Zonda and Rupu in South Africa and Kenya respectively already putting up such facilities.

With the rising e-commerce trends, it is foreseeable that e-commerce companies will grow to demand the kind of sophisticated logistics properties in use by more advance companies like Amazon in the U.S. Presently one of the most promising logistical hotspots in Sub-Saharan Africa is Lusaka, Zambia which has been framed for its strategic geographic location at the heart of Southern, Eastern and Central Africa.

Five of the cities with the highest prime logistical rents in Sub-Saharan Africa include Luanda, Abuja, Accra, Maputo and Lagos. As reported by the Logistics Performance Index 2016 (LPI), which rates the logistic friendliness of countries, the top 5 in Africa include South Africa with a score of 3.78, Kenya (3.33), Botswana (3.05), Uganda (3.04) and Tanzania (2.99). The same index ranks South Africa at position 20 out of 160 globally, Kenya at 42nd and Botswana at 57th. For developers, the opportunities are ripe and present as the challenges are.

Logistics Property Trends in Africa

Kenya construction market to grow by Ksh. 604.3 billion

Kisumu Concrete Products (KCP) Ltd is today set to sign an equity purchase agreement with Ascent Capital Advisory Services.

The firm, which deals in tiles, concrete blocks, kerbs and road culverts as well as ballasts for road construction, said this was its first private equity deal in the region.

KCP, established in 1978, has actively been supplying roofing and flooring tiles as well as concrete blocks to housing developers and ballast to local and foreign road contractors, helping improve its revenues across western Kenya.

The KCP-Ascent deal could open up Western Kenya for investors in search of investment opportunities in Kisumu and surrounding counties.

The two parties welcomed the investment saying it would help increase production at KCP enabling it take advantage of the growing opportunities in the building and construction industry.

“This private equity investment is timely given the rapid population growth and the introduction of a devolved governance system in Kenya, which has led to increased demand for housing and improved infrastructure construction materials in Western Kenya,” it said.

The deal comes hardly a month after Kisumu hosted an international investment conference and exhibition last month that was attended by small and medium firms from 12 counties in the region.

The conference also attracted 12 international exhibitors as well as investors from US, Europe and Asia besides local multinationals and private equity investors.

Kenya’s wealthy have identified healthcare and retirement property as the most interesting areas for commercial real estate investment in 2020, according to Knight Frank’s Wealth Report Attitudes Survey issued today.

In a survey of wealth managers across Kenya, 27% reported that their clients were planning to invest in commercial property in 2020.

When asked which segments of the commercial property were becoming more interesting for wealthy investors, health and retirement property topped the league table, with 100% of managers saying the segments were becoming more interesting, as Kenya’s population aged over-55 now passes 3.5m people.

Ben Woodhams, Managing Director Knight Frank Kenya, said: “The need for more care and retirement facilities in Kenya has been largely overlooked until now, but as The Wealth Report 2020 Attitudes Survey shows, the country’s expanding elderly cohort, growing middle class, and ongoing rural-urban migration, is creating new needs for such facilities.”

Commercial property in healthcare and retirement typically spans care homes and daycare centres, private hospitals, acute hospitals and surgeries, dentists’ surgeries, pharmacies, supported living and retirement villages.

Retirement villages, which have been a rising asset class globally, most often create clusters of residential properties in beautiful surroundings with on-site caretakers, medical facilities and medical staff. The villages also often provide servicing of the homes, across laundry, cleaning and, in some cases, catering.

Andrew Shirley, Editor of The Wealth Report, said: “As elderly parents become further removed from their adult children as a result of migration, and professional lives put families under more pressure when faced with taking care of the elderly, retirement villages can often provide an ideal solution for everyone, leaving the elderly in their own homes, but with ample support.”

Conversely, the real estate segment drawing the slowest growth in High Net Worth Individual interest is now industrial property, which was recently the golden child of the sector. Industrial property typically spans factories, industrial parks, light industrial properties and warehousing and has drawn a series of large new investors in the last two to three years, which may account for the relatively subdued interest in the sector in 2020 as the current investments bring a step-change in the volume of new industrial property coming to the market.

Kenya’s rich are also showing relatively less interest in investing in property debt than in other areas of real estate.

However, 2020 has delivered a renewed appetite for residential real estate investments, with 80% of the wealth managers reporting their clients had an increased interest in making commercial investments in residential properties. They also reported surging interest in student housing, which has been a hotspot of new activity in recent months, recently establishing a funding precedent when Kenya’s first green bond was launched to fund student housing.

Property market investment appetite (taken from The Wealth Report Attitudes Survey 2020) 
<table width="0">
<tbody>
<tr>
<td width="128">Healthcare</td>
<td width="64">100%</td>
</tr>
<tr>
<td width="128">Retirement</td>
<td width="64">100%</td>
</tr>
<tr>
<td width="128">Residential</td>
<td width="64">80%</td>
</tr>
<tr>
<td width="128">Student housing</td>
<td width="64">77%</td>
</tr>
<tr>
<td width="128">Hotels/leisure</td>
<td width="64">71%</td>
</tr>
<tr>
<td width="128">Infrastructure</td>
<td width="64">70%</td>
</tr>
<tr>
<td width="128">Retail</td>
<td width="64">67%</td>
</tr>
<tr>
<td width="128">Development land</td>
<td width="64">69%</td>
</tr>
<tr>
<td width="128">Offices</td>
<td width="64">57%</td>
</tr>
<tr>
<td width="128">Education</td>
<td width="64">56%</td>
</tr>
<tr>
<td width="128">Logistics</td>
<td width="64">50%</td>
</tr>
<tr>
<td width="128">Agricultural</td>
<td width="64">50%</td>
</tr>
<tr>
<td width="128">Property debt</td>
<td width="64">30%</td>
</tr>
<tr>
<td width="128">Industrial</td>
<td width="64">29%</td>
</tr>
</tbody>
</table>
&nbsp;

Kenya’s wealthy target investment in health, retirement property

PDM Holdings has announced the completion of its Vienna Court project, a grade-A low-rise sustainable office complex along State House Crescent in Nairobi.
The Sh2.6 billion state-of-the-art project, whose pre-let space is already at 65 per cent ahead of the scheduled official opening this year, has become the face of urban renewal in Nairobi, even as the city itself plans to revamp its look to enhance global investor appeal.
PDM has pioneered innovative developments in Kenya for over 50 years. It has helped to shape the direction of real estate trends in the country by pursuing a philosophy of developing properties that not only serve an economic purpose but that also uplift the quality of life for the community. Just three years after it demolished an old under-utilized apartment block on the existing site, PDM has upgraded Vienna Court with a major urban transformation, giving it a contemporary global look as well as helping to unlock its full potential and value.
"We are excited to announce the completion of Vienna Court,” said Mr. al Nashir Hasham, the Executive Director at PDM Holdings. “A sneak peek of the building attests to the amount of effort PDM has put in to ensure it delivers the best grade-A office space in the city,’’ he added.
In June 2015, Nairobi County government launched a Sh530 billion urban integrated development master plan which includes redevelopment of old housing estates, high storey car park buildings and rehabilitation of medical facilities. The plan seeks to salvage the city’s past glory blemished by aging buildings and a surging urban population in need of settlement. Nairobi was once known as the Green City in the Sun. The County government has already issued a tender for rehabilitation of its 17,000 houses, even as it seeks to create 100,000 new units to accommodate 650,000 people.
A recent survey by the World Bank which sampled 750 cities across the world also termed city renewal as one of the factors that attracts more investors, fueling economic growth.
The Vienna Court is among only a few projects in East Africa with international Leadership in Energy &amp; Environmental Design (LEED) pre-certification, awarded for embracing green features like rainwater harvesting, balconies for solar shading, solar control glass, LED lighting with motion sensors, and bicycle storage facilities, among others.
Unlike projects where ecosystems are interrupted during construction, trees and an island were preserved and used as central features while excavating the current site. The architects have also used local pink stone helping incorporate vintage Independence era Kenyan design style with trendy modern finishes, achieving an enviable facelift while preserving the property’s rich history.
The building is fitted with a gym, a cafeteria, modern conferencing facilities with break-out areas, and a large landscaped central courtyard with reflecting pools creating a serene office environment. It provides ample parking space with 409 parking bays representing 1 parking slot for every 265 square feet of space. Priority will also be given to energy efficient cars in the time to come in a bid to promote environmental sustainability across the board.

Estate Cloud

Estate Cloud

Centum Floats its Ksh. 4 Billion Housing Bond

By Estate Cloud - over 2 years ago - Kenya

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