Developers target low-cost home buyers on Mombasa Road

IN SUMMARY

·         Rogam Investments, Karibu Homes and Peninsula Development offer Sh1 million houses.

·         The developers are pitching to buyers that the monthly mortgage payments for the units are equivalent to their current rent.

By JOHN GACHIRI, jgachiri@ke.nationmedia.com

Three real estate developers are building low-cost houses along Mombasa Road targeting first-time buyers with prices starting at Sh1 million per unit.

The developers — Rogam Investments, Karibu Homes and Peninsula Development Company — are pitching to buyers that the monthly mortgage payments for the units are equivalent to their current rent.

At an interest rate of 15 per cent per year, a Sh1 million house would require Sh12,000 a month for a 20-year mortgage while a Sh2.5 million house would require Sh31,000 a month at the same interest over a similar period.

Rogam Investments is undertaking the project as a mixed development of studios and apartments in Mlolongo, Machakos County. The project, dubbed First Homes, has a sale value of Sh500 million.

The firm said that it was aiming at attracting first-time home buyers such as working recent graduates.

Mr Aaron Gitonga, a director at Rogam Investments, said the firm chose to serve the low-end market because it is under-served unlike the high-end one which has signs of saturation.

“This is a market where there is a lot of demand but not many developers are looking at it,” Mr Gitonga told the Business Daily.

First Homes has studio apartments that go for between Sh1.5 million and Sh2.7 million, one-bedroom units at Sh2.5 million and two-bedroom ones at Sh3.6 million.

Rogam Investment began building homes in January last year and the first ones are expected to be ready for occupation by September.

The firm is financing the project through a mix of equity and loan from Co-operative Bank.

Availability of less costly, large tracts of land is the main reason attracting developers to Mlolongo and neighbouring Athi River towns. A large pool of employees from factories and offices along Mombasa Road and the Export Processing Zone is another reason.

Karibu Homes is putting up a Sh3 billion estate in Athi River. The apartments are priced at between Sh1.6 million and Sh5.25 million. The estate will have 1,082 units.

Peninsula Development Company plans to roll out apartment blocks worth Sh1.5 billion by the end of this year targeting first-time home buyers with units costing from Sh1 million. 
The firm has a mixed development in Mlolongo and another one on Ngong Road, also targeting first-time buyers.
Mr Gitonga said that land prices are the biggest barrier to putting up more low cost units. “The price of land should be less than 10 per cent of the total construction cost,” said Mr Gitonga. Currently the price is about 25 per cent of the overall cost of a project. 
Property consultants say that land prices are still on the rise in most satellite towns.

http://www.businessdailyafrica.com/Developers-target-low-cost-home-buyers-on-Mombasa-Road/-/539552/2798810/-/lgwse0z/-/index.html

Foreign billionaire investors seek a slice of Kenya

By Sheila  Kimani

The thriving real estate sector is attracting foreign investors from across the world as they seek to capitalise on the country’s strategic location as a regional business hub. Mukesh Ambani When Delta Corp sold two prime properties in Nairobi, few people connected it to India’s richest businessman, Mukesh Ambani. The 53-year-old tycoon made Sh2.5 billion from the deal in Kenya in which he sold Delta Centre in Upper Hill to the World Bank and Delta Towers in Westlands to University of Nairobi Staff P
ension Scheme and PricewaterhouseCoopers. Ambani has been slowly upping his interest in East Africa, with his company, Reliance Industries, working alongside the Delta Corp East Africa Limited. In mid-2013, Business Daily reported that he had acquired ten prime plots in Nairobi valued at Sh2.9 billion that are to be used for commercial and residential development. In February 2014, the same paper reported that Mukesh Ambani had reported another gain of Sh189 million from part-sale of his Kenyan real estate holdings.  A month earlier, Delta Corp chief finance officer Hardik Dhebar was quoted as saying that real estate projects in Kenya had returned Sh2billion profit.

Aliko Dangote Coming to Kenya in the entourage of Nigeria’s former president Goodluck Jonathan in 2013,  Aliko Dangote felt certain that in three years, his company would be one of the dominant cement producers in Kenya. He revealed plans to build a $400 million cement plant. “We have realised that if we really want to do something big in East Africa, we must operate in Kenya. We believe that in the next two and half years, we will be the dominant player in cement in Kenya,” Forbes quoted him saying at the time. With the likes of Bamburi Cement and Athi River Mining already holding the largest market share, he knew it would not be easy for him to penetrate the Kenyan market. However, owing to his reputable Dangote Cement business, which is the largest cement manufacturer in Africa with stakes in nine African countries like Tanzania and Ethiopia, there was a chance that his entry into the Kenyan market would be a game-changer.Two years on, the cement plant is yet to be as it faces opposition from different quarters.

Adil Popat has worked in different sectors like motor vehicles and hospitality. His interests in the hospitality sector saw him work with top franchise Kempinski to bring business travel and luxury to Kenya, in the form of Villa Rosa Kempinksi. Years after working with top hospitality brands like the Hilton Hotel, witnessing how other top brands had succeeded in Kenya and even starting his own hotel franchise — Ocean Basket — Popat’s partnership saw a transformation in the Kenyan hospitality industry. Apart from Villa Rosa Kempinski, his firm’s focus has seen him expand under the Acacia brand to Acacia Premier Kisumu, a four-star hotel located in the leafy Milimani suburb and offers views of Lake Victoria, the 168-room Acacia Premier Nairobi, as well as many other investments that run into millions of shillings.

Richard Branson Owing to the Maasai Mara’s wildebeest migration that made it the Seventh Wonder of the World, Virgin Atlantic’s billionaire CEO Richard Branson chose to invest in Kenya’s tourism, specialising in luxury camps. With an already buzzing airline company, Sir Branson proudly announced that he would be opening a luxury game camp next to the Maasai Mara Game Park as it would be in line with the tourism and travel industry. Yet again, this would be a familiar venture given his South African reserve that has been in business for over 20 years. Following in the footsteps of his Ulusaba private game reserve located in the Sabi Sands in South Africa, the Kenyan luxury safari camp dubbed Mahali Mzuri boasts a 15-tent luxury camp whose rates are about $590 (Sh50,740) per person per night.

Read more at: http://www.standardmedia.co.ke/lifestyle/article/2000166060/foreign-billionaire-investors-seek-a-slice-of-kenya?pageNo=2