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Global real estate investment volumes by institutional investors is projected to reach $78.9 billion in 2021 according to this year&rsquo;s Investment Intentions survey.

Africa and American markets (excluding the U.S) are expected to receive the smallest portion of the funds at $2.05 billion while.

The report states that institutional investors plan to move a minimum of $66.9 billion in assets into global real estate, with funds of funds expected to invest $11.1 billion while the lion&rsquo;s share,&nbsp;almost half, at $32 billion, will be committed to European real estate.

North America is set to receive $21.1 billion while Asia-Pacific real estate is projected to get $11.7 billion. Last year the survey estimated Europe would attract about $48.09 billion, North America ($23.4.4 billion) while Asia-Pacific was set to bring in $34.19 billion in real estate investments.

According to the survey, 84% of institutional investor respondents said they prefer office, industrial/logistics and residential real estate.

The survey also found that on average, institutional investors allocate 9.3% to real estate compared to the average target of 10%. The annual publication is sponsored by the European Association for Investors in Non-Listed Real Estate Vehicles, the Asian Association for Investors in Non-Listed Real Estate Vehicles and the Pension Real Estate Association.

Nakuru is the fourth largest town in Kenya, located approximately 160 km North-West of Kenya’s capital, Nairobi. The town also serves as the headquarters of Nakuru County, the fourth largest county in Kenya in by GDP per capita with an estimated population of 376,979 people as at January 2018, according to the County Government of Nakuru.

A recent survey carried out by Cytonn Investments identified the main factors driving the real estate market in the town. These include positive economic growth, devolution, population growth, and infrastructural developments.

Nakuru County’s GDP per Capita is the fourth highest in the country after Kiambu, Nyeri and Kajiado at USD 1,413. The rising per capita income has increased demand for real estate in Nakuru Town.

Devolution has also opened up Nakuru Town and thus creating demand for housing units, retail spaces and office spaces, which host investors and government officials. Further, devolution has attracted well-oiled individuals like entrepreneurs, private investors and government institutions such as public service boards to the county headquarters.

Related; <a href="https://estatecloud.co.ke/nakuru-county-to-get-cement-plant/">Nakuru County to get cement plant</a>

Currently, Nakuru Town has an estimated population of 376,979 that has grown from 286,411 as at the 2009 census while the County has a population of 1,891,739, according to the County Government of Nakuru. This has increased demand for real estate developments for residential as well as commercial purposes.

Nakuru has also benefited from infrastructural developments from the National and County developments. Early this year, the Kenya Urban Roads Authority (KURA) announced plans to upgrade 22 km of roads within the town at a cost of Ksh. 1.8 billion.

The County Government of Nakuru also in 2017 announced plans to upgrade Lanet Airstrip, to a fully fledged airport that would accommodate huge passenger and cargo planes. Details of completion timelines are yet to be disclosed.

These initiatives will improve accessibility to the town and thus open it up to real estate development.

However, the town’s real estate market has also faced challenges including infrastructure development, access to funding and inadequate planning.

Nevertherless, the market has begun welcoming institutional developers who are coming up with investment grade housing units and the urban population is appreciating them as evidenced by high uptakes of 39.7% for mid-end apartments and 22.9% for high-end apartments, additionally, indicating that developers can exit developments in 3 years.

The town’s residential sector recorded average rental yields of 4.2%, price appreciation of 4.6%, hence a total return of 8.8% with a price range of between Ksh. 6.1m and Ksh. 13.0m for high-end housing, and between Ksh. 3.6m to Ksh. 4.9m for middle-income housing. Apartments and detached units had total returns of 10.7% and 6.8% on average respectively.

Read; <a href="https://estatecloud.co.ke/riparian-land-proves-costly-for-developers/">Riparian land proves costly for developers</a>

Based on the survey, the market prefers apartments as they attract lower rental rates thus more affordable with rents at on average Ksh. 23,970, 56.4% lower than detached at Ksh. 55,000.

Nakuru Town land markets recorded an annualized capital appreciation of 8.8% this is attributed to speculation and increased demand for land in residential zones. On retail space, the survey found that Nakuru has rental yields of 5.8% on average as compared to Nairobi, Mombasa and Kisumu that have average rental yields of 9.7%, 10.0% and 9.9%, respectively due to the low rent.

The study also established that Nakuru Town lacks Grade A office spaces with most of the buildings being Grade C. In terms of performance, office spaces in Nakuru Town record average rental yields of 5.4%, 3.5% points lower than the 8.9% for mixed-use developments in the market.

Also Read; <a href="https://estatecloud.co.ke/the-process-of-getting-a-mortgage-in-kenya/">The process of getting a mortgage in Kenya</a>

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Africa Proptech Forum is set to take place at WeWork’s first African office location, The Link, Johannesburg on the 1st of October 2019 during the 10th annual Africa Property Investment (API) Summit.

The Proptech forum will provide selected startups with an opportunity to pitch their disruptive business models to Africa’s most high-profile real estate investors and developers.

Funding for Proptech has grown significantly from $20 million in 2008 to an average of $12bn annually since 2016 with the number of startups and seed funding rising each year. This has attracted significant attention from private and institutional investors.

“The opportunity to pitch to a high-profile and diverse gathering of capital players is fundamental to the growth of this emerging sector,” says Proptech Africa co-founder Sean Godoy, especially as more and more venture capital funds look to Africa’s growing markets for the next big Unicorn.

Defined as the use of information technology (IT) to help individuals and companies research, buy, sell and manage real estate, Proptech is still emerging in Africa says Godoy. But with 6,000 Proptech firms registered globally according to event partner, Unnisu, this new frontier will play a key role across every aspect of real estate on the continent.

Data and its role in attracting investment

“A number of startups especially in Nigeria, Kenya, Ghana, SA, and Botswana are pioneering the use of digital technology to leapfrog ahead and overcome traditional market challenges, such as land titles, mortgages, leasing, tenants, while also providing greater improved data and transparency for investors seeking to invest in new markets and assets,” says Godoy.

The improvement in data collection for the API Summit’s Kfir Rusin is important as “it mitigates one of the continent’s historical pain points, while also showcasing the scale of opportunity and value for investors considering investing in Proptech.”

Pitching and Networking 

“Proptech in Africa represents a significant billion-dollar opportunity and to host at WeWork, one of the World’s most transformative and high-profile startups is an example of the opportunity that Proptech Startups have on the continent,” added Rusin.

The rampant proliferation of Proptech, and subsequent investment, is due to the inherent vertical integration opportunity between real estate and technology across the entire value chain says Godoy.

Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/property-technology-continues-to-attract-venture-capital/">Property technology continues to attract venture capital</a>

Forum provides opportunity for property start-ups to pitch

Listed property firm Home Africa is <a style="color: #ff6600;" href="https://www.standardmedia.co.ke/business/article/2001357713/developers-lose-billions-in-property-market-slump">looking to secure a strategic investor</a> according to the company’s managing director Dan Awendo.

Financial statements of the company for 2019 show that the group reported a Ksh. 95 million pre-tax loss which was 31.6% less in comparison to Ksh. 138 million reported the previous year.

The company reported a lower post-tax loss of Ksh. 77 million in the half-year of 2019 compared to a loss of 112 million in 2018, a decrease of 31.2%

In the financial report summary, the company said that it expects Migaa Golf Estate, being a long-term project, to realize its profitability towards the end of the project in 3- 4 years’ time.

The company’s accounting policy is to carry the proceeds of the project are as current liabilities under differed income in the balance sheet.

The firm said that deposits from the sale of plots in the project had reached Ksh 2.8 billion as of June 30th, 2019 compared with Ksh 2.6 billion for the previous year. The company expects to convert the amount to revenues in its statement of profit or loss as the percentage of project completion improves over the next 3- 4 years.

Book value of the group’s sellable land and other inventory stood at KSh. 3.7 billion in 2019.

“We continue to invest in the infrastructure of the various projects which will help improve the market value of the land bank as the land becomes more desirable,” said the report

The firm's financials also revealed that the company had accumulated negative earnings of Ksh. 1.44 billion in 2019, an increase from Ksh. 1.36 billion in 2018.

The firm is currently weighed down with liabilities topping over Ksh. 5.6 billion of June 2019. Home Afrika’s share price is currently trading at Ksh. 0.53, a 95.7 percent discount to par value.

Listed property performance on the Nairobi Stock Exchange has had a dismal record with most listed real estate firms unable to improve shareholder value. Stanlib is in the process of off-loading Fahari-I REIT to ICEA Lion Group after shedding massive shareholder value.

Next Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/ksh-11-billion-industrial-park-to-be-ready-by-march-2020/">KSh. 11 billion Industrial Park to be ready by March 2020</a>

Listed property firm Home Africa looking to secure a strategic partner

Nakuru town real estate market to maintain growth pattern

Big malls in Nairobi are now making cinemas and the entertainment industry anchor tenants in a new drive aimed at increasing foot traffic and boosting returns. This is a shift from the traditional super retailer anchor tenant model which has suffered from the headwinds of oversupply in the city in recent times.

The variation in strategy was recently highlighted following the release of 2018 financials by NSE-listed REIT, Stanlib’s Fahari-I. The leadership highlighted that the addition of a modern 300 seat capacity, 3- screen cinema at Greenspan Mall which will be commissioned in the second quarter of 2019 is expected to increase their portfolio’s returns.

The 3D multi-functional cinema already forms 2.7 per cent of Stanlib Fahari-I retail estate portfolio and is valued at KSh. 85 million having cost KSh. 48 million. The cinema is underpinned by a 10-year lease.

Related; <a href="https://estatecloud.co.ke/kenyas-only-listed-reit-fahari-i-realized-a-net-profit-of-kshs-193-million-in-2018/">Kenya’s only listed REIT, Fahari-I realized a net profit of KShs. 193 million in 2018</a>

“Looking at the current real estate market, investors can tap into the entertainment segment to increase returns as there are opportunities there. The need is even currently high in mid-tiers spaces than in upper markets,” Stanlib asset manager Ruth Okal said.

Among Nairobi’s major malls, some of the establishment that are already employing strategies from the entertainment industry include Two Rivers Mall, Sarit Centre, and 7-D Cinema at TRM while Garden City mall hosts the country’s second IMAX theatre according to The Star.

The packaging of entertainment and other customized facilities together with shopping is a global trend based on the desire by shoppers to add experience to shopping and the need by mall operators to attract and retain them in a mutually beneficial flow.

Read; <a href="https://estatecloud.co.ke/myspace-properties-joins-nse-incubation-program/">MySpace properties joins NSE incubation program</a>

It has always been said that technology will change everything, and technology has changed a lot of things. With an increasing exposure of real estate to modern technologies, the potential for a digital disruption in the sector has increased manifold.

According to a Deloitte study on technology and industry, new developments in technology will require people to adapt the way they live, work, and consume. This will require real estate providers to develop innovative strategies for meeting the demands of tomorrow if they are to stay ahead of the curve. This requires them to keep tabs with some of the developing technologies some of which are highlighted here.

Big data

In real estate, one of the rapidly growing technological segments relates to big data. A growing number of real estate deals rely on data analysis to arrive at decisions. ‘From faster, more accurate appraisals to sophisticated forecasts, the use of analytics can lead to smarter decisions about property investments.’

Related; <a href="https://estatecloud.co.ke/nairobi-among-cities-most-responsive-to-smart-tech/">Nairobi among cities most responsive to smart tech</a>

As the recent Deloitte big data report puts it, ‘it seems likely that companies specializing in big data processing will enter the real estate services market.’ These companies are likely to give real estate providers a run for their money owing to their superiority in innovation and technology to break into new markets as well as their viability for cash backing from financial institutions.

But big data is not the only tech monster to watch out for

Robotics

Real estate can be a labour intensive business especially for developers. Robotic gets into the picture at the intersection between increasing wages and automating some tasks. The report points out that ‘robot manufacturers may not be content to remain suppliers to real estate service companies, putting real estate service providers’ share of the building services market at risk.’

What’s more, with advancements in artificial intelligence, robots are expected to take on more complex tax in future including reception and sales which could alter the way real estate service providers deal with personnel issues in reality. The way we experience reality in real estate however, is also under a major transformation

Augmented and Virtual reality

Another piece of promising technology is the AR/VR combination. These are already playing significant roles in visualization and location of defective components, reproduction of experiences in the built environment and provision of location specific data. The report states that ‘AR/VR devices can display corresponding system information directly in the field of view and, when walking around the building.’

Read; <a href="https://estatecloud.co.ke/new-retail-brands-take-over-space-following-nakumatt-uchumi-exits/">New retail brands take over space following Nakumatt, Uchumi exits</a>

In future, AR technology could reduce the need for hard copy plans and documents as well as the need for agents to take clients on property tours as these will be better done with the aid of AR/VR devices. But these kind of devices feed on data, and so we have sensors to collect the data.

Sensor technology

The foundation of all data-driven real estate technologies are the sensors. Sensors technology has been getting better while their prices have been falling, enabling widespread adoption. One of the kay advantages is that sensors will aloe real estate service providers to operate on demand because sensors can spot troubles immediately they pop up. The result will be quicker responsiveness, lower cost and greater efficiency.

The main catch however will result for the data captured by the sensors which will enable real estate service providers to align their services according to user requirements. Data like recorded dates of maintenance or repair, day-to-day resource utilization, energy efficiency and building control will come in handy for those interested in optimizing building performance.

Internet of Things

This is the string that ties it all together. The embeddedness of technology into everyday objects is one of the fastest growing trends in technology. Leveraging on connectivity toensure communication between people and objects, the internet of things will place huges masses of concrete and glass in the palms of people.

The International Energy Agency suggests that “IoT technology could lower the energy consumption of residential and commercial buildings globally by as much as 10 percent between 2017 and 2040.” This can only be made possible by establishing smart ways for linking data and devices to enable intelligent automated decisions.

In summary, the question is not whether technology will change everything in real estate but when. Even more important is the ability to take strategic action in the face of rapidly advancing technology. Complacence could give away your position to the competition.

Also Read; <a href="https://estatecloud.co.ke/african-real-estate-makes-little-progress-in-transparency/">African real estate makes little progress in transparency</a>

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Technololgy catching up with real estate's slow movers

Tatu City has welcomed the Government’s move to offer incentives to industries operating in Special Economic Zones, saying that the initiative will help to spur growth, and drive Foreign Direct Investment (FDI), in Kenya’s built infrastructure.

Speaking at the sidelines of the East Africa Property Investment Summit at a Nairobi Hotel, Nick Langford, Country Head Rendeavour Kenya – the majority owner and developer of Tatu City – said the decision will encourage more firms to set up in Kenya, and help in the successful operation of Industrial Parks that have been established in mixed-use development projects such as Tatu City.

“With Special Economic Zone status, there are massive tax advantages for setting up businesses in Kenya making it possible for firms that had hitherto not considered the country as a business destination, to do so,” he said.

National Treasury Cabinet Secretary, Henry Rotich, in this year’s Budget Statement, said that the Government will be offering industries operating in Special Economic Zones a host of incentives to boost creation of modern urban centres.

“Under the SEZs, the Government will provide a host of incentives for industries to operate in and boost creation of modern urban centers. These incentives include exemption on VAT, reduced corporate tax rates for a defined period, access to quality infrastructure, and one-stop shops for licenses,” he said.

Tatu City also singled-out increased investment in infrastructure development as well as Government’s efforts to enhance the ease of doing business in the country to increase FDI

As part of its masterplan, Tatu City is setting up an industrial park on 457 acres that has already seen a host of industries sign up to expand or relocate their business there. These include Unilever, Chandaria Industries, Dormans, Kim-Fay, Chandaria Industries, amongst others.

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