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Nairobi DMU schedules have been gazetted by the Kenya Railways as part of a new schedule for the Nairobi Commuter Rail Service following the recent launch of the Diesel Multiple Units (DMUs). 

The new schedule shows arrival and departure times for the DMUs which are now expected to dominate the gazetted routes in the number of trips. 

Two routes, Syokimau and Embakasi, will have DMU services and commuter rail service while Ruiru, Kahawa West and Kikuyu will continue with the old commuter rail services. 

<a href="http://www.krc.co.ke/" style="color: #ff6600;">Kenya Railways</a> will now operate five DMU trips on the Syokimau routes on a daily basis, beginning 6:25 a.m and ending at 2100hrs based on the DMU schedules for Nairobi. 

There will also be six trips on the Embakasi route beginning at 6:29 a.m at the Pipeline terminus with the last trip scheduled to arrive in Nairobi at 1949hrs.

Normal commuter rail services will continue to run as scheduled. The new service is expected to ease traffic on the usually clogged Mombasa road and improve access to the surrounding highly populated residential areas. 

Use of the DMUs in Nairobi according to the schedule will cut the travel time needed to move from Syokimau to Nairobi&rsquo;s CBD to 33 minutes while it will take 34 minutes to travel from Embakasi to the town centre with stopovers at pick-up points. 

The Nairobi DMU project is the government&#39;s effort to reduce the chronic traffic congestion in the city which runs into billions of shillings worth of losses every year The time savings for riding the DMUs will cost Ksh. 100.

Equity Bank has threatened to auction properties located along Kampala’s Lumumba avenue over failure by the owner, Simbamanyo Estates to service a loan agreement.

Equity Bank yesterday issued a legal notice warning the property firm that it had until October 7 to pay at least 30 per cent (Ksh. 339M) of the amount or face auction.

“All potential buyers, tenants and occupants of the properties contained on Lumumba Avenue and Mutungo-Luzira are informed that if Simbamanyo does not pay to the bank the 30 per cent as ordered by the court, public auction of the mortgaged properties will take place on October 8,” read the notice.

Simbamanyo had taken the matter to court disputing the amount claimed by equity and challenging the legality of loans drawn from Equity Bank Kenya.

Uganda’s High Court had earlier, on Monday, granted Simbamanyo’s prayer to stay the sale of the properties by Equity Bank but added that in order to uphold the decision, the property firm must make the 30 per cent payment.

The dispute stems from an agreement by Equity Bank Kenya and Equity Bank Uganda to advance about Ksh. 600 million to Simbamanyo Estates in August 2012, with at least Ksh. 350 million drawn from Equity Bank Kenya and Ksh. 250 million from Equity Bank Uganda.

According to court documents, the consolidated sum of the loan including interest and fees would come to a total of Ksh. 810 million. However, the real estate firm challenged the figure, claiming it was only aware of Ksh. 719 million.

Among other accusations, Simbamanyo has accused Equity Bank Uganda of providing Equity Bank Kenya with an illegal cover to conduct business in Uganda where it has no jurisdiction.

The real estate company raised an issue on the inclusion of Equity Bank Kenya and Bank One of Mauritius (which provided a bridge facility of $10M) in the loan document despite the fact that it had never applied to the two banks and had no bank accounts with them.

However Equity Bank refuted the claim, stating that Bank One was drafted into the transaction at the request of Simbamanyo who acting through NISK capital had sought to restructure the loan in 2017, with a Ksh. 1 billion Standby Letter of Credit from Bank One.

The bank argued that the real estate company was aware of all the parties involved in the transaction and had benefited from it.

Simbamanyo has also accused the bank of absolute contempt of court for advertising the properties for sale before the expiry of a 30 day period given to pay the 30 percent.

“We find it irregular to find that lawyers for the bank [Equity] are publishing a response to the caveat emptor and giving our client 30 days to clear 30 per cent and before this time elapses they have advertised the same properties for sale,” the firm’s lawyers told the<a style="color: #ff6600;" href="https://www.monitor.co.ug/Business/Finance/We-shall-sell-disputed-assets-Equity-notifies-Simbamanyo/688608-5621098-r8x362z/index.html"> Daily Monitor</a>.

Simbamanyo had sought the funds for the construction of a hotel property in Mutungo, Luzira north-east of Kampala and facilitate the takeover of a prior facility advanced to Simbamanyo by Shelter Afrique.

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.

Tatu Lauds Government's Incentives to Industries in Special Economic Zones

There are two essential parts to achieving affordable housing in Kenya: building decent, low-cost homes, and developing a housing finance market that enables low-income earners to buy those homes. For, without finance, almost no home price is low enough to be affordable on an average salary.

For this reason, Kenya’s mortgage market has been growing. Housing loans have risen more than ten-fold since 2006, from 1,278 loans valued at Sh. 19m 12 years ago to 24,458 loans valued at Sh. 203.3bn by 2015, according to the Central Bank of Kenya (CBK).

But the market still remains tiny when compared with other nations. In Kenya, the mortgage loan value was equivalent to 3.15 per cent of GDP by 2015. In South Africa, it contributed some 32 per cent of GDP.

Yet in countries where mortgages drive a large flow of home buying, home owners prime the pumps of the economy with additional spending power in an inflow that makes for faster economic growth.

However, our own mortgage market is held back by multiple constraints, including bureaucracy. Normally, the purchase of a property takes around three months to complete. But mortgage finance in Kenya typically takes six months to arrange, mired in nine separate, manual, administrative processes.

These span land rent and rates clearance certificates, transfer filing and consent, the search, the valuation and its endorsement, and the stamp duty and lodging of documents. This process, which the government is now working to simplify, adds cumbersome work, as well as risk, thus increasing the cost of mortgages.

Most primary mortgage lenders thus set higher mortgage rates and focus on high net worth individuals and high earners who can afford higher rates. They also run shorter repayment periods, ranging from as low as three years to an average of eight years.

But repaying at such high rates, so rapidly, puts borrowers under considerable pressure and leads to defaults, which today stand at some 12 per cent of Kenyan mortgages. It is additionally a model that offers very few opportunities for low and middle-income Kenyans to own homes.

We, thus, need a radical overhaul of mortgage financing if we are to achieve widespread home ownership, which is where mortgage refinancing comes in.

Providing a source of secure, long-term funding for mortgages has a direct impact on the affordability of home loans for home buyers and is a vital pillar to achieving a developed mortgage system. Such funding was critical, for instance, in Malaysia and Singapore, where about 80 per cent of houses are now mortgage-owned.

For this reason, the National Treasury is contributing to the Affordable Housing Pillar of the BIG 4 Agenda by supporting the creation of a lending facility (the Kenya Mortgage Refinance Company) to provide longer-term funds for banks and SACCOs for residential mortgages in Kenya.

Related; <a href="https://estatecloud.co.ke/cbk-sets-stage-for-mortgage-refinancing-companies-in-kenya/">CBK sets stage for Mortgage Refinancing Companies in Kenya</a>

The Kenya Mortgage Refinance Company (KMRC) will provide secure funding to mortgage lenders so that they can offer more mortgages at lower prices. With such long-term funding, primary mortgage lenders will also be able to lengthen repayment periods to 15 to 25 years, and offer a fixed interest rate, making mortgages both safe and affordable for low-income earners.

The new financing will mainly be available for lower cost housing, valued at less than Sh. 4m in Nairobi metropolitan area (Nairobi, Machakos, Kiambu and Kajiado) and Sh3m elsewhere. Likewise, to qualify for the housing loan, Kenyans must be earning less than Sh. 150,000 a month.

Refinancing the financial institutions will also enable them to expand their lending scope to finance developers as well.

The Government Affordable Housing project seeks to develop 500,000 houses in five years, which presents the largest real estate opportunity for a long time. But with the country having only managed to produce about 50,000 units over the last two to three years, achieving the targeted 100,000 houses a year will require considerable investment in construction.

The financing structures necessary to achieve this will be outlined in forums at the April 10th -11th East African Property Investment Summit, which aims to support the Government Affordable Housing Project. But as government and industry leaders convene to discuss the delivery of the targeted affordable housing, mortgage refinancing will be taking centre stage as a crucial enabler.

Article By Johnstone Oltetia, the Interim CEO Kenya Mortgage Refinance Company (KMRC)

OOpEd: Affordable housing requires a new shape for the mortgage industry

Equity Bank In Dispute With Ugandan Developer Over Ksh. 600M Loan

According to the Nairobi Metropolitan report released today by Cytonn investments, land prices in the Nairobi metropolitan area recorded an average annual capital appreciation of 3.7% in 2017, a drop compared to the 6-year compounded annual growth rate (CAGR) of 17%.

This was attributed to among other things; a tough operating environment due to high levels of political uncertainty, a credit crunch ensuing from the rates cap law, and a slowdown in developer activity stifling demand for land.

High-rise residential areas recorded the highest annual capital appreciation in 2017 of 4.8%. These are areas where zoning allows for densification which together with the growing demand for lower and middle-income housing, drove the rates up.

The locations under this category include Kahawa, Kileleshwa, Kasarani, Dagoretti, Githurai and Embakasi. Kahawa had the highest capital appreciation for the year at 8.3 per cent driven by demand for student housing while Embakasi had the lowest at 1.7 per cent. According to the report, the average asking price per acre for these locations was Sh. 108 milllion with Kileleshwa being the highest at Sh. 306m while in Githurai it was Sh. 46m.

Low-rise residential on the other hand recorded a capital appreciation of 4.5 per cent on average, 0.3 percentage points lower than high-rise residential areas. Of these, Karen recorded the highest capital appreciation of 12.9 percent from Sh. 46m per acre in 2016 to Sh. 52m per acre in 2017. Prices in Nyari reduced by 0.1 percent, recording the most dismal performance among the low-rise areas. However, this was barely significant as price per acre remained the same for both periods, at Sh. 109m.

Commercial zones like Westlands and Kilimani on the other hand, had a capital appreciation of just 3.4 per cent year on year compared to the six-year CAGR of 20.4%- a significant drop. The slowdown was occasioned by increased commercial development activity in those areas, resulting in an oversupply of office space. In 2017, the oversupply in office space was estimated at 4.7 million square feet.

Overall Kilimani had the highest capital appreciation of 7.5 per cent placing the land values at Sh. 387m per acre while Upperhill and Riverside both had reductions of 0.5 per cent. Also, the CBD still has the highest land prices at Sh. 634m per acre.

Site and service schemes in Satellite towns recorded the lowest appreciation at 2.7 per cent against an average 3.7 per cent for the market and a 3.0 per cent annual appreciation for unserviced land in the same localities. The implication is that buyers prefer to pay for unserviced land which is 36% cheaper and provide the services for themselves rather than paying a premium for the services.

Generally there was a decline in speculative activity in the land markets in 2017, particularly in satellite towns where speculation is often widespread, with investors adopting a wait and see attitude during the prolonged electioneering period. Places like Ruiru, Juja, Thika and Athi River have in previous years seen capital appreciation as a result of speculative tendencies.

&nbsp;

The government faces a backlash in the implementation of the affordable housing agenda after it emerged that only 33% of the salaried employees are willing to make contributions to the affordable housing fund. The government through the State Department of Housing and Urban Development, has been trying to win the hearts of Kenyans into the plan but most citizens seem reluctant.

Many see the tax as an additional burden to the already huge tax load they have to deal with, relative to considerably low incomes across a large segment of the workforce. However, Housing PS Charles Hinga remains determined to the cause.

The government has wanted employees to contribute 1.5 per cent of their monthly earnings, subject to a maximum of KSh. 2500 per month to the fund, an amount which the PS says would amount to just KSh. 450,000 for each employee over the next 15 years assuming the maximum contribution is made.

Read; <a href="https://estatecloud.co.ke/in-japan-the-government-struggles-to-get-millions-of-houses-occupied/">In Japan, the government struggles to get millions of houses occupied</a>

Speaking during an event organized by cement maker, Bamburi, Mr. Hinga said that Kenyans are at a disadvantage because of historical mistakes which have to be corrected. In a country where the cost of 1 acre piece of land can be as high as KSh. 500 million, the PS said one of the biggest barrier to achieving the universal affordable housing dream remains the high cost of land.

“We can’t talk about a billion shillings and acre and still talk about affordable housing in the same sentence,” the PS remarked. He also mentioned that apart from initiatives to increase investor access to land, the government was working on a one-stop shop for developers to sort out all approvals within a matter of days.

The government is trying to tackle the challenge by providing cheap or free land to serious investors in order to kick off the projects. County governments have also been keen to avail land to investors. Recently, Meru county government promised a delegation of Chinese investors access to free land and a speedy issuance of licenses to build hotels and factories in the county.

Source: Standard

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A third of employees willing to make contributions to affordable housing fund

African cities have continued to benefit from sustained Foreign Direct Investments (FDI) coming from the rest of the globe. The World Bank’s State of African Cities report highlights the developments in Africa’s FDI over the past few years.

The report says shows that four major cities, strategically located at important locations on the continent are FDI destinations in Africa: Cairo in Northern Africa, Lagos in Western Africa, Johannesburg in Southern Africa and Nairobi in Eastern Africa.

Much of the investments flowing into Africa comes from Western Europe (38%), followed by Asia(20%) and North America (15%). North America invests mostly into Central (32%) and Western Africa (18%), arguably due to commodities like oil.

Related; <a href="https://estatecloud.co.ke/another-way-to-tackle-africas-housing-crisis/">Another way to tackle Africa’s housing crisis</a>

In the ranking FDI for African cities between 2013 and 2016, the report indicates that Cairo holds the first place in Africa in terms of volume of FDI attracted, followed in second place by Johannesburg, and Tangiers. Nairobi was ranked eighth.

Most of the FDI for East Africa comes from Western Europe (27%), Asia and Pacific (22%), other African countries (20%) and North America (14%). Furthermore, FDI forecasts for Eastern Africa show that service investments will see the highest growth rates over the next four years.

China’s biggest city, Shanghai, leads global rankings for foreign direct investments, followed by Singapore and London. According to the report, the largest sources of FDI globally are Paris, Tokyo and London.

Cairo (64th) and Johannesburg (69th) did quite well in the global investment rankings. However, no African city was ranked within the top-10 FDI recipient cities globally.

Most FDI in Africa passes directly or indirectly through Johannesburg, the FDI capital of Africa, followed by Nairobi and Lagos making these cities strategic gateways for investors wanting to get into the African investment arena.

There is also a significant amount of FDI between African cities. The top-five investors in Africa from Africa are from these cities; Johannesburg, Casablanca, Lagos, Nairobi and Cairo.

Read; <a href="https://estatecloud.co.ke/african-real-estate-makes-little-progress-in-transparency/">African real estate makes little progress in transparency</a>

Estate Cloud

Estate Cloud

Nairobi DMU schedules to cut commute time to 34 minutes

By Estate Cloud - over 2 years ago - Kenya

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