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The World Bank has approved KSh. 25 Billion loan to Kenya from the International Bank for Reconstruction and Development (IBRD). The loan is meant to enable access to long-term financing of affordable housing by low income earners in the country.

The loan will be channeled through the bank’s Kenya Affordable Housing Finance Project (KAHFP), mainly to support the Kenya Mortgage Refinance Company, a lender of last resort established to help banks issue long-term mortgages to Kenyans and supervised by Kenya’s Central Bank.

KMRC’s goal is to drive affordability of mortgages by providing long-term funding to financial institutions at much lower rates, thus enabling them to offer long-term mortgages (about 25-years) to home buyers. The project will also assist the Ministry of Lands and Physical Planning to improve property registration and address structural constraints in the land management system in Kenya.

Kenya has an estimated 200,000 annual housing shortfall, expected to rise to 300,000 by 2020 while the government aim at providing 500,000 houses in five years to plug the deficit.

“Urban housing currently remains unaffordable for most Kenyans due to cost of financing, the short loan tenures and the high cost of properties,” Felipe Jaramillo, World Bank Kenya Country Director, said in a statement.

“We believe that Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately held skills and resources towards achieving the country’s Big 4 affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” said Felipe.

The world bank said KAHFP is expected to increase access to finance by tripling the proportion of urban households having access to mortgages by working with financial institutions that target low income segments of borrowers.

Kenyan commercial banks currently hold just about 26,000 mortgages of approximately KSh. 11,000,000 in value or about 3.15 percent of GDP, which is way low compared with outstanding mortgages in more advanced economies even though SACCOs also play a big part in home financing for most Kenyans.

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Almost two thirds of companies in Kenya are facing warehousing shortages, according to a poll released today by Tilisi Developments Limited, the first mover in Kenya’s emerging Grade A logistics real estate sector.

Of 52 companies polled across Kenya’s manufacturing, FMCG, pharmaceuticals, logistics, import, export, retail and e-commerce sectors, 62 per cent reported that they had experienced some kind of warehousing shortage in the recent past.

"Of the 62 per cent of warehousing users that have experienced warehousing shortages, 35 per cent said they had to rent out extra space, 10 per cent were forced to deliver the goods directly to the clients’ premises rather than storing them, incurring extra costs, 12 per cent expanded their own warehousing space, while six per cent did not find any solution,” found the report.

The companies polled also reported constraints caused by the quality of their warehousing, with 60 per cent of users, spanning both warehouse owners and warehouse tenants, highlighting quality issues.

These included poorly ventilated spaces, leakages, power shortages, and poor structural planning, which was causing difficulties in accessing goods within the warehouse. Respondents said this had increased the rate at which their stock was getting contaminated, and in cases where food and flowers were being stored, it was accelerating their deterioration.

"Kenya has experienced exponential growth in various sectors of its economy and population. Yet, this has been in contrast to the slow growth of quality warehousing to support and sustain it. This has led to a country experiencing a demand that is vastly outstripping its supply," said Kavit Shah, co-CEO of Tilisi Developments Limited

Tilisi launched the country’s investment in a Grade A Logistics Park as a new real estate segment two years ago, last month selling 49 acres of serviced warehousing land to Africa Logistics Properties, which has been funded by the IFC, CDC and others to drive a new wave of warehouse building across Africa.

“We are now seeing other warehousing projects emerging too, and it is clear that the need is acute,” said Kavit.

Of the companies polled by Tilisi, half said they had sought new warehousing facilities, but pharmaceutical and food producers reported a scarcity in warehousing with cold storage, and of temperature controlled warehousing.

The international logistics companies also reported that modern well-configured logistics space and height was scarce, with the majority of Kenya’s warehousing currently falling short of international standards and constructed for small traders, rather than large companies. 

However, investment in warehousing remains low. The 2017 Nairobi City County Permit Activity Reports from the Kenya Property Development Association (KPDA) reported 2,303 planning permits approved by Nairobi last year. Of these, only 199 were in the warehouse class, while commercial properties registered 809 applications.

Yet, Kenya is among the top five flower exporters in the world, alongside The Netherlands, Columbia, Ecuador and Ethiopia. In 2014, Kenya earned $531m from floriculture industry, exporting 125 tonnes of flowers. But research has shown that poor cold chain management sees about 20 per cent of the value of flowers wasted, equating to a loss of $100m for retailers, in addition to considerable losses for producers.

This has led to some occupiers developing their own storage space, but now reporting space constraints in achieving further warehouse expansions. 

Of the respondents with in-house storage space, proper planning has ensured they have no issues with truck movement around their warehouses. But the respondents who were renting warehouses reported difficulties in both truck access and parking, with 40 per cent of the companies reporting that truck access to their warehouses was problematic.

The research also found that warehouses around the airports and shipping docks were providing better quality facilities than those located away from towns, but that this had led to higher demand for the urban facilities, and rising rents.

"The reality is that in achieving adequate storage, companies are being forced to turn to Do-It-Yourself solutions in this one area of the real estate industry, in a way that is pushing them into building approvals, planning and servicing, adding new paper trails, and raising profound infrastructure challenges,” said Ranee Nanji, Co-CEO of Tilisi.

Lands Cabinet Secretary Prof Jacob Kaimenyi will set up a taskforce that will come up with rules and regulations that will operationalise critical land laws that were passed by Parliament last year.

The laws are Land Laws (amendment) Act and Community Land Act.

The taskforce will have two months to complete its work.

“I will be announcing the members in the coming days. It’s important that we have those rules. The two laws removed all grey areas in our land matters and they now offer clarity on how to manage land issues,” he said.

The CS said the rules and regulations are the final piece in the jigsaw that will see people deal with land issues with more ease.

The new Acts of Parliament came after a Supreme Court Advisory opinion on how the Ministry of Lands and National Land Commission can work together.

According to Mr Ibrahim Mwathane, an expert on land matters, the Land Laws (amendments) Act 2016 clarifies roles of the Lands Cabinet Secretary and the National Land Commission in order to reduce institutional conflicts. Digitisation process “It also provides a legal mechanism for receiving, investigating and providing recommendations for the restitution of historical injustices and provides a framework for the eviction of unlawful occupiers from all categories of land,” he said It also provides a mechanism for the determination of minimum and maximum sizes of private land as well as providing for the express recognition under the new Land Registration Act of titles previously issued under the Land Titles and Government Land Acts. Finally, it provides for the appointment and qualifications of a Deputy Chief Land Registrar and County Land Registrars.

In the same breath, the Ministry of Lands has partially closed down Nairobi Central registry located at Community area in Nairobi.

The registry which is the biggest is housed at the ministry headquarters at Ardhi House. The partial closure commenced on January 9 and will end on February 14.

The affected services will be issuance of land rent clearance certificates, consent to transfer and other related processes.

The partial closure is meant to digitise land records. Prof Kaimenyi said core services won’t be affected save for minor disruptions for greater good in future.

“It’s a critical exercise because we want to move land files from manual storage to electronic. We have been doing it in other registries across the country,” he said. The CS said there will be minimal disruptions but in the end it will help in easy access of the files.

“The issue of lost files will be a thing of the past. That is why this digitisation process is very critical,” he said.

Source; Daily Nation

Kaimenyi forms team to generate land rules

The ministry of lands has re-engineered the land registration processes into 3 simplified steps, bringing down the amount of time it will take to register land to just 12 days compared to the previous 49 days and 9 procedures reported by the World Bank doing business ranking.

In the latest notice published by the ministry and signed by CS Faridah Karoney, the process now begins by an application for land rent clearance certificate, consent to transfer/lease/charge and valuation for stamp duty assessment in one step. This is followed by a site visit and report writing for valuation purposes as the second step. The final in the process is the registration of title to land and other instruments.

Furthermore, the application for land rent clearance, consent and valuation can now be assessed and done online through <a href="https://accounts.ecitizen.go.ke/login">e-Citizen</a> government portal. The ministry has also encouraged citizens to avail all documents in one batch for each required service in order to facilitate faster delivery of services.

The move will further ensure that Kenya, improves it ease of doing business standing in global terms. Last year, reforms at the ministry were credited for Kenya’s improvement in the World Bank’s ease of doing business ranking.

Kenya ranked 61 in the latest <a href="https://estatecloud.co.ke/kenya-still-ranks-122-in-property-registration-despite-improving-to-position-61/">ease of doing business report</a>, and 122 in property registration. The country still has a lot do if it is to match up to some of the leading countries where it takes a day or less to register property, at little or no cost.

The ministry of lands has also embraced a one-stop shop model for processing most of the requirements with regards to property registration, by moving all the operations to the 9th floor of Ardhi House in move to consolidate the procedures and reduce processing time.

Ministry of lands says land registration

Kenyan growth cramped by warehousing shortage - affecting two-thirds of companies

The relatively high mortgage rates in Kenya have drawn significant attention over the years with more efforts being applied over the past few years to control or bring the rates down to more affordable levels.

In the latest move, KMRC last week announced its first tranche of loans to financial institutions which it says will enable banks to drive down rates to less than 10 per cent.

This is in addition to the Central Bank of Kenya&#39;s past interventions through a variety of monetary measures that include the reduction of the Central Bank lending rate, (CBR), to 7% from 8.25% in January.

These benefits are supposed to be passed on to borrowers in the form of reduced mortgage rates, with the aim that more customers will take advantage of preferential mortgage rates from banks.

KMRC expects that as a result, banks will see an increase in the number of first-time loan applications and those looking to lock in fixed-rate mortgages.

The goal of these measures is to get more people onto the property ladder and encourage investment, boosting the housing market and aiding recovery in the residential sector.

Banks however have already reported increased mortgage defaults, a representation of the economic hardship being experienced in the country.

As a number of firms struggle and move into losses, we have also seen high levels of unpaid leave and job cuts, with unemployment at 42% in June 2020, up from 35% in March 2020 based on KNBS data.

In a&nbsp;recent analysis of&nbsp;mortgage rates, property firm Knight Frank sees the current market conditions, in addition to the likelihood of a &ldquo;second wave&rdquo; of infections, as an indicator that lenders will be more stringent.

With this likelihood, the <a href="https://www.knightfrank.co.ke/">firm</a> says that lenders will likely be more cautious with their approach to new loans and be more diligent in their review and approval processes. In effect, getting loans even at reduced mortgage rates may still prove a challenge to ordinary Kenyans.&nbsp;

Home buying can be a quite involving task. Apart from social and economic assessments, and legal procedure for the transaction, there is usually the need for a physical assessment of the property. It is essential as part of the due diligence, for prospective buyers to have reasonable assurance that certain physical elements of a property are in good condition.

Type of materials used

This applies more so to older properties. Materials like lead paints and asbestos are some of the most common culprits here. These materials have been found to be hazardous to human health and should not be associated to human habitation whatsoever because they are likely to cause cancers which is not only fatal but costly enough to include in the price of a home. In some jurisdictions, it is mandatory for instance to remove lead paints especially where children are involved.

Other contentions may arise where the developer used low quality materials for instance in the finishes. The buyer ought to know the quality of materials used and how durable they are.

Drainage

Some houses, even recently built ones, may have inbuilt drainage flaws due to compromised quality or design errors. Although they may not be obvious in plain sight, these shortcomings will in future ensure big-ticket repairs by the buyer which may involve a total overhaul of the drainage system. A basic exercise like filling up the tubs, sinks and flushing the toilet all at the same time may occasionally help identify the problem.

Electrical problems

You need to be sure that the installed electrical system will satisfy your usage needs in this age of electrical appliances and the internet of things. It is important to ask questions about the installed capacity just to be sure. Additionally, you may want to take a look at the electrical panel, the wiring in the house to spot any loose wires that may pose a danger or need replacement etc. No one wants live wires on their walls. Also, try all switches to see if some do not work.

Foundations and walls

There may be attempts by some developers to conceal poorly constructed houses. Determining the structural integrity of a house or building is another matter but there are usually tell-tale signs that could mean point to flaws in the structure. These are usually manifested on the foundation or walls of buildings.

Dampness in the building’s base or on a side of the wall long after a building has been complete should be investigated. In addition, cracks have to be taken with a pinch of salt. The buyer should also check whether the building has in place dehumidifiers or such materials as would be used to keep moisture at bay. However, to the untrained eye, a building inspector would to a good job. Which brings us to the issue of having an inspection done.

Hiring an inspector

Our five senses can only do so much, especially where you have no professional competence in a particular field. The major advantage of hiring an inspector is that you get to have a guarantee on the structural integrity of the house as well as an opinion on whether the building is constructed to the building standards of the local jurisdiction. And in the case of defects, a building inspector ca be able to estimate the cost of repairs for you so that you make an informed decision

Buying a house is a big investment and you need to know not only how things work in the house, but also what works and most importantly, that everything works. In addition to the above, you need to get your hands on literally everything you can within the house; windows, doors, floors, fixtures and what not.

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Five things to check before you buy a house

Buyers and tenants maintained the upper hand in the real estate market throughout 2019, demanding bargains in deals as oversupply and a general economic slowdown impacted the market.

Knight Frank’s Kenya Market Update for the second half of 2019 shows that prime retail rents decreased by 4.2% to US$4.6 per square foot per month in the period, pushing the cumulative decline to 9.8% in 2019.

This was a fall from the previous price of US$5.2/sqft per month which was charged for line shops in the malls.

The continued oversupply of shopping mall spaces gave tenants the advantage in retail leasing transactions as mall owners are eager to fill up spaces.

Occupancy levels in retail averaged 77%, although established malls such as The Junction recorded vacancy levels of less than 10% in the last six months of the year.

In the commercial office market, Grade A office rents remained unchanged at an average of US$1.3/sqft./m in the second half of 2019. However, absorption of Grade A and B office space in Nairobi increased by 41% compared to the uptake in the first half, as fewer but larger deals were concluded.

This was primarily driven by a flight to quality stock and increased demand from co-working space operators.

Ben Woodhams, Managing Director at <a style="color: #ff6600;" href="https://www.knightfrank.co.ke/">Knight Frank Kenya</a>, said: “Landlords are increasingly having to make concessions to remain competitive, including giving longer rent-free periods, reduced rents and escalations, as well as contributing to occupier fit-outs.”

Prime residential prices in Nairobi fell by 4% in 2019, a slower pace compared to 4.5% in 2018. Notably, there were signs of price stability in the prime residential segment in the second half of 2019 as more deals closed before year-end, with sellers becoming more realistic with regard to pricing.

Prime residential rents on the other hand decreased by 2.8% in 2019, compared to 1.3% in 2018 as oversupply continued to tilt the market in favour of tenants.

It is anticipated that the repeal of the interest rate cap – allowing commercial banks to once again price loans based on their risk assessment – will boost liquidity in the market, which would subsequently be felt in the recovery of prime residential rents and values.

Since the interest rate cap was introduced, banks have been reluctant to lend to the private sector at interest rates that they felt did not adequately reflect the risks of such loans, preferring instead to invest in government bonds, which in turn led to a huge shortfall in liquidity in the economy generally.

With the repealing of the cap, it is expected that the situation will return to normal as banks resume lending to the private sector which will in turn contribute to a wider economic recovery,” notes the report.

Read; <a style="color: #ff6600;" href="https://estatecloud.co.ke/real-estate-multinationals-in-africa-prefer-building-from-scratch/">Real estate multinationals in Africa prefer building from scratch- survey</a>

Estate Cloud

Estate Cloud

World Bank approves Sh. 25 bn for affordable housing

By Estate Cloud - about 4 years ago - Kenya

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