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Property developer Sycamore Pine Limited is seeking regulatory approval to put up 1,959 housing units in Migaa Golf Estate, Kiambu County.

An approval document filed with the National Environmental Management Authority (NEMA), shows the residential estate which is set for the Migaa Golf Estate in Kiambu will be known as Samara.

The developer has carved out 17.2 acres of land from the expansive Migaa Golf Estate to carry out the development. According to the filed document, the housing units will comprise of only two and three-bedroom apartments.

Phase one of the project has already been funded to the tune of Ksh. 1.4 billion. More than any other location within the Nairobi metropolitan area, Kiambu has grown into a magnet for large real estate projects involving housing. This has been backed by a number of factors including the demand for housing and residential land, which have made landowners ditch coffee farming.

Just yesterday, Tatu city announced that it had beat the 2020 near-market freeze to sell out more than 90 per cent of its land parcels. Tatu city&rsquo;s sales department <a href="https://citizentv.co.ke/business/tatu-city-beats-real-estate-slack-sell-residential-properties-7952162/" style="color: #ff6600;">explained</a> that the demand for residential spaces has been on the rise with uptake increasing greatly in the past year.

&ldquo;On a monthly basis, we&rsquo;ve managed to sell about 10 units and expect the growth trajectory to persist,&rdquo; said the company&rsquo;s Head of Sales, David Karimi. Other developers that have announced major housing projects for Kiambu County over the next few days include Centum, Hydro Developers, Haco and many others.

Related;&nbsp;<a href="https://estatecloud.co.ke/kiambu-county-set-for-biggest-housing-project/" style="color: #ff6600;">Kiambu County set for the biggest housing project in Kenya with 30,489 units</a>

See Also;&nbsp;<a href="https://estatecloud.co.ke/kiambu-county-records-highest-increase-in-land-prices-in-the-country/" style="color: #ff6600;">Kiambu County records highest increase in land prices in the country</a>

Further Reading;&nbsp;<a href="https://estatecloud.co.ke/kiambu-pushes-for-ruiru-city-status/" style="color: #ff6600;">Kiambu pushes for Ruiru City status</a>

Real estate investors are taking a more cautious approach globally following the spread of the pandemic. Almost without exception, commercial real estate investments fell worldwide during the first quarter of the year.

Global real estate firm JLL which tracks data says that direct investment in commercial real estate dropped by 5 percentage points year-on-year to US$200 billion.

“Credit and equity markets were among the first to react, with REITs the first in our industry to experience the negative impacts of COVID-19,” said Sean Coghlan, Head of Global Capital Markets Research.

The firm said that total returns fell 31 percent on average in eight of the world’s top REIT markets.

Evidence shows that global economic growth contracted for the first time in 11 years during the first quarter of 2020, following the spread of the virus across the globe.

However, the fall in investment activity varied across regions and the first quarter data does not fully reflect the effects in countries whose cases grew through March.

The crisis has thrown lenders into a period of significant uncertainty following the market volatilities, central bank interventions, and unprecedented policies holding sway.

“Despite ample liquidity in debt markets, lenders remain in a phase of ‘price discovery’ and are focused on asset managing their existing portfolios. This has led to greater scrutiny over-leverage, and a focus on experienced sponsors, resilient sectors and strong locations in quoting new deals,” said Sean Coghlan.

Investors have responded defensively, narrowing on sectors that have been least affected by the pandemic with multifamily, industrial and data centre assets poised to be the favourites for investors based on income stability, occupation density and operation criticality.

According to JLL, investment in the global industrial market rose by 7 percent in the first quarter as investors anticipate an explosion in e-commerce, accelerated by the effects of the pandemic. The multifamily sector kept its place with investments falling just 1 percent below last year’s levels during the same quarter.

“With the near-record volume of dry powder held by investors, global commercial real estate is still poised to see healthy investment over the long term,” says the firm.

Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/hotels-and-retail-property-sectors-hardest-hit-by-covid-19-globally/">Hotel and retail property sectors hardest hit by COVID-19 globally</a>

Almost a fifth of manufacturers in Kenya have lost sales in the past five years on a warehousing shortage that is getting sharply worse, according to research released today by mega-city developer, Tilisi Developments Limited.

A detailed survey of 56 companies in Kenya, spanning manufacturing, pharmaceuticals, horticulture, logistics and retailers, found that 16% had sought new warehousing in 2017/2018, with a rising proportion failing to find any solution.

The search levels represented a sharp jump from the previous year, when 9% of respondents searched for new warehousing, while 5% did in 2015.

Moreover, “the majority of companies seeking warehousing in the last five years, being 31 per cent of the total respondent base, suffered business damage as a result,” reported Tilisi.

“Some 43 per cent reported delays in meeting orders, while 29 per cent reported lost sales. A further 14 per cent said the difficulty and longevity of their search for new space delayed their expansion plans,” stated the report.

“Kenyan GDP is being hampered excessively by the difficulties involved in finding new space for storing and sorting goods for distribution,” said Ranee Nanji, co-CEO of Tilisi Developments.

Related; <a href="https://estatecloud.co.ke/these-are-the-top-property-trends-shaping-african-real-estate/">These are the top property trends shaping African real estate</a>

The business impact of the shortage was sharpest in manufacturing, despite being one of the pillars in the government’s Big Four agenda for development. But the greatest pent-up demand was found in the pharmaceutical industry.

In the last five years, 71 per cent of the pharmaceutical companies surveyed searched for new warehousing, and 43 per cent of them in the last year.

It took many of them up to a year to find facilities, while others have not yet found a solution. Moreover, 40 per cent of them reported problems with their existing warehousing.

“By sector, the highest level of dissatisfaction with existing warehousing is in the pharmaceuticals industry at 43 per cent, followed by FMCG/ manufacturing at 38 per cent, and horticulture at 33 per cent,” reported Tilisi.

Access and location were reported as the greatest difficulties, cited by close to two-thirds of those who were currently dissatisfied.

Many also reported problems with their existing buildings, including low heights, which are seeing many Kenyan companies stacking pallets to only one-third of the height that is normal in international warehousing, meaning the same storage requires three times the space.

Other problems include warehouses without loading platforms, which is meaning companies must lift items individually into trucks, considerably slowing loading and adding labour costs.

Read; <a href="https://estatecloud.co.ke/alps-logistics-centre-draws-new-e-commerce-operator/">ALP’s Logistics Centre Draws New E-commerce Operator</a>

This lack of quality warehousing is also affecting the prices of goods and the cost of living in Kenya. According to McKinsey &amp; Company, logistics costs in Kenya account for 40 per cent of the price of consumer goods, compared to the global average of six per cent.

“Businesses depend on lean supply chain processes to keep their costs low and achieve competitive advantage, yet poor inventory storage and management is leading to pricing in Kenyan that is at almost twice the best-case levels,” said Kavit Shah, Co-CEO Tilisi Development Ltd.

Tilisi properties says warehousing shortage hurting economic growth

First quarter real estate investments fell as investors remain cautious

The government has struggled to attract private investors into the affordable housing programme using one of its key incentives, the ‘guaranteed offtake agreement’.

The off-take model sought to ensure developers are paid all their dues within two-years after completion of the project.

Under the arrangement, the developer and the National Housing Corporation (NHC) enter into an off-take agreement prior to construction.

The agreement requires the developer to engineer, procure, construct and finance the units, and then sell the units to NHC upon completion at an off-take price of KSh 40,000 and KSh 50,000 per sqm (net internal sqm.).

Also, the developer is required to build 70 percent of the units to the AHP specifications and allowed to build 30 percent to market specifications. As part of the agreement, developers must provide cash collateral or a letter of guarantee of KSh. 100 million (US$1 million) to enter into the off-take agreement.

However a recent report by Centre for Affordable Housing (CAHF) shows that developers are not enticed by the off-take agreement in its current form.

Developers have cited difficulty in procuring construction finance and the poor credit rating of the government locally in reference to the government’s reputation for late and unreliable payments.

They also pointed out that the off-take agreement ignores development realities. For instance, the allowance that 30 percent of units can be built to market specifications as a lure to developers is only applicable to areas with high land-values, such as centrally located land in big cities where the market for higher-value housing can be established and not in peri-urban areas with longer commutes and lacking in amenities.

It also does not take account of the recent weakness in the Kenyan economy, which has softened considerably since 2017, resulting in a contraction of off-plan sales and diminished speculative interest in the residential real estate sector.

The report states that the proposed AHP off-take model offsets normal developer operations where cash flow financing is more aligned to market realities with regard to pricing of units and access to construction finance.

Related; <a style="color: #ff6600;" href="https://estatecloud.co.ke/housing-shortage-provides-ksh-400-billion-opportunity/">Housing shortage provides Ksh. 400 billion opportunity</a>

Buying a house for many Kenyans is a financial commitment comparable to no other because of the burden it imposes on cash flow. For many, it is a lifetime commitment whose obligations they struggle to fulfill monthly. Most people when considering the cost of their mortgage loan, will give weight to the interest payments over the total cost of credit. However, taking into account the fact that banks do not shoulder third party charges may save you a months or even years in repayment.

In a bid to assist the public in breaking down the credit burdens, the Kenya Bankers Association in partnership with the Central Bank of Kenya, recently launched <a href="http://costofcredit.co.ke/" target="_blank" rel="noopener">costofcredit.co.ke</a>, a website that assists users to estimate the total cost of credit for any loan or mortgage.

The basic tool allows a user to select a bank and check the cost of credit for that bank. The tool further allows users to compare the cost of credit across banks which can help as a basis for decision making. Take for instance an aspiring home owner working with a budget of 5m for a home and having a deposit of 10 per cent of the amount. Seeking a mortgage loan for the balance of Ksh. 4.5 million, they may come up with the following figures from the portal, giving a comparison between the interest payments and the total cost of credit at monthly instalments of Ksh. 55,985 for 240 months:
<table style="height: 802px;" width="693">
<tbody>
<tr>
<td width="143">BANK</td>
<td width="96">LOAN AMOUNT</td>
<td width="126">INTEREST PAYMENTS (Ksh. '000')</td>
<td width="137">TOTAL COST OF CREDIT (Ksh. '000')</td>
<td width="101">MONTHLY INSTALMENT (Ksh.)</td>
</tr>
<tr>
<td width="143">KCB</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,838</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">CBA</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,720</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">NIC Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,653</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">Equity Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,355</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">Housing Finance</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,347</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">Consolidated Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,306</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">Diamond Trust Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,306</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">Stanbic Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,281</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">National Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,281</td>
<td width="101">55,985</td>
</tr>
<tr>
<td width="143">I&amp;M Bank</td>
<td width="96">4.5m</td>
<td width="126">8,930</td>
<td width="137">9,257</td>
<td width="101">55,985</td>
</tr>
</tbody>
</table>
Source: costofcredit.co.ke

From the table, a borrower who takes a mortgage form NIC Bank will pay Ksh. 306,000 more or at least 5 more months of repayments. Similarly, a borrower with CBA will continue to repay their loan 10 months after I &amp;M Bank customer has completely secured his home from the mortgage liability.

It should be observed that the interest payments are constant but major variations arise from the total cost of credit for the different banks. Essentially different banks have different third party costs which include legal fees, valuation, stamp duty and insurance and which gives the variations in the total costs of credit.

Although what <a href="http://costofcredit.co.ke/" target="_blank" rel="noopener">costofcredit.co.ke</a> is an estimation tool developed by the Kenya Bankers Association, prospective borrowers can use it as a planning tool to project the expected cost of a mortgage with little error. Third party fees vary frequently and so for actual information borrowers are advised to contact the specific banks. The banks should provide a Total Cost of Credit breakdown as well as the Loan Repayment Schedule, as required by the Central Bank.

There are currently 45 institutions offering mortgages in Kenya, and for a mortgage seeker, navigating through all this information manually is definitely costly. But with the internet, now a mortgage seeker has the privilege to appreciate all this information in one place at the press of a button and the slide of a finger. So before you take that mortgage loan, go ahead and check it out on <a href="http://costofcredit.co.ke/" target="_blank" rel="noopener">costofcredit.co.ke</a>.

What to do Before You Take the Mortgage Loan

Equity Bank has auctioned property belonging to a Ugandan developer following a court dispute involving a $10.8 million loan advanced to the developer in 2017.

The developer, Simbamanyo Estates Limited, has lost two prime properties comprising a four-star hotel (Afrique Suites) and Simbamanyo building, which houses the Gender ministry in Kampala over failure to pay the loan.

Simbamanyo Estates had pledged the hotel to Equity Bank Limited as collateral in securing the $10.8 million loan.

Equity Bank sold the two properties by public auction on October 8 this year after the Ugandan high court dismissed pleadings by proprietors of Simbamanyo Estates Limited seeking to stop the sale.

Simbamanyo Estates had petitioned the Court of Appeal seeking orders to maintain the status quo stopping the sale of their property by Equity Bank which is seeking to recover loans worth $10.8 million.

The property firm had earlier sued Equity Bank Uganda and its Kenyan parent challenging the legality of the outstanding loan, following a June 4 notice of default given by the bank demanding payment of arrears worth $398,362.33.

Another real estate firm, Luwaluwa Investments, has taken over the hotel property after purchasing it from the bank at $4,350,000.

Meera Investments Limited owned by tycoon Sudhir Ruparelia bought Simbamanyo building which is housing the Gender Ministry among other entities on Lumumba Avenue.

Equity Bank lawyers Sim Katende and Frederick Mpanga sought a court order compelling Simbamanyo Estates to reimburse legal costs incurred by the bank.

Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/equity-bank-in-dispute-with-ugandan-developer-over-ksh-600m-loan/">Equity Bank In Dispute With Ugandan Developer Over Ksh. 600M Loan</a>

Estate Cloud

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Developer to Build 1,959 Housing Units in Kiambu's Migaa Golf Estate

By Estate Cloud - about 2 years ago - Kenya

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