Category Archives: Kenya real estate

Nairobi Real Estate Moment: 2021

  • The Nairobi Expressway construction that will span from the Jomo Kenyatta International Airport to Westlands, has reached downtown Nairobi and is causing disruptions to real estate and traffic .. some changes to retail include..

  • Changes to Malls – many of which are largely idle above the first floor. Quite a bit of foot traffic there is from bank customers visiting their branches which have now been relocated to the third and fourth floors of Nairobi malls.

Other real estate stories.

  • An EFG Hermes report on Nairobi real estate found the demand for affordable houses has a disconnect that has seen prices are softening in Nairobi – at high-end residential (-27% below 2017 peak), and commercial properties (-13% off-peak). Also, the tough Nairobi office market is very visible (vacancy rates of 22% compared to 9% in 2011) with exposure to some financing banks including KCB and Housing Finance.
  • Orbit Group and Grit Group have partnered on a 25-year $53.6 million sale & leaseback transaction for a light industrial (warehouse and manufacturing) property on Mombasa Road, supported with a $25 million loan from the IFC. Orbit Products Africa, controlled by the Sachen Chandaria family, is a leading contract manufacturer for brands in personal care and home care products and its clients include Reckitt Benckiser, Unilever, Colgate and Henkel. They will expand the plant by an additional 14,741 m2 warehouse space and improve it to modern FMCG industry standards to achieve an IFC EDGE green building certification on completion. As part of the deal, $31.5 million will be a “perpetual note”, raised from Ethos Mezzanine Partners GP and BluePeak Private Capital and additional proceeds from this will be invested in the St Helene Private Hospital in Mauritius, an idea that was conceived by Catalyst Principal Partners. Grit Real Estate Income Group is listed in London and Mauritius 
  • A Knight Frank report, the “Africa Logistics Review” finds that Nairobi had the best real estate market between 2018 and 2021 for prime warehousing and logistics.  “Nairobi recorded the highest increase in average prime rents across Africa, from USD 4.70 psm in 2018 to USD 6 psm ” – and developers have grown over 170,000 square meters in the last five years. Kenya has the highest concentration of special economic zones (SEZ) in Africa (61 of the 180 SEZ’s). The country is also making good progress to grade A warehousing and in growing a real estate investment trust (REIT) ecosystem.  Also because of high land values in Nairobi, developers have sought towns/areas beyond traditional industrial hotspots Read more.
  • Speaking of REITs .. Acorn Project (Two) LLP, the Issuer of the Acorn Medium-Term Green Note (MTN) Program, closed the final tranche on 16th July 2021, raising Kshs 2.096 billion against the target of Kshs 1.438 billion representing a subscription rate of 146%.  As part of this transaction, the Acorn green bond was converted into the Acorn Student Accommodation Development REIT (ASA D-REIT). Read more.
  • The Architectural Association Of Kenya reported on development challenges within the Nairobi metropolitan area. A decade after an electronic construction-permitting system covering Nairobi, Mombasa, Kiambu, Machakos, Kisumu, Kajiado and Kilifi was deployed with the support of the World Bank Group, it is plagued by frequent disruptions and system downtime. In Nairobi, the system has not been operational for more than three months of 2021 and in a survey of AAK members, 46.7% of the respondents indicated that they had to wait for over 6 months for their applications to be processed or granted approval.
  • Kenya’s Lands Ministry is doing a digitization of title deeds through a National Land Information System (NLIMS), referred to as ArdhiSasa with a goal to have all land records digitized by the end of 2022.  The Lands Cabinet Secretary indicated that the Ministry has scanned and digitized 30 million documents in Nairobi.
  • A Cytonn Real Estate report on properties in the years 2020 found that “residential units in Thindigua, Syokimau and Rosslyn recorded the highest returns to investors and land asking prices recorded an overall annualized capital appreciation of 2.3%.” According to the report, Gigiri was the best performing office node in FY’2020, followed by Westlands and Karen, In the retail sector, Westlands and Karen were the best performing nodes while in hospitality, Westlands-Parklands was the best performing node. Read more in the report.
  • Cytonn is now doing a restructuring and has applied to wind down two funds – the Cytonn High Yield Solutions LLP and Cytonn Real Estate Project Notes LLP through administration and has invited creditors to submit their debt claims, with proof, to Kereto Marima who is the appointed administrator – by November 29, 2021.
  • Hotels are not doing well with many iconic sites closed or on sale due to Covid-19 and the resultant curfews and travel bans that have affected the flow of tourists into Kenya.
  • Many hotels expect a steady recovery once the curfew is lifted (which happened in October 2021). See a survey of hoteliers by the Central Bank of Kenya.

Some hotels that are gone: Intercontinental and the Nairobi Dusit/ D2 which recovered after the January 2019 terror attacks only to succumb in the Covid-19 aftermath.

Some hotels currently closed: Mt Kenya Safari Club, Norfolk, Radisson Blu.

Some hotels on sale: Outspan, Treetops (should the Queen buy the hotel ahead of her 100th birthday?), Fairview and Country Lodges, Jumuia (Nakuru).  

Real Estate Moment: Property Management Tools in Nairobi

Everyone is a member of a housing estate in Nairobi, from Spring Valley to Kibera and other neighbourhoods above and beyond. They all have to deal with things like security, service charges and garbage collection, to others like painting common areas, noise & smoke disturbances and shared parking spaces.

How do residents manage? Often it takes a few keen dedicated people, usually long-term residents in the area, who volunteer their time to marshal and organize the other residents who are largely passengers. They spend a lot of time organizing and resolving matters and chasing and collecting monthly payments from their fellow residents.

What tools can they use to help in these time-consuming and unwelcome but necessary tasks? I put up a query on Twitter and these are the top ones shared back, in no particular order.

  • Verus Africa: Their platform is the only one that is cloud-based and caters for residential as well as commercial real estate management. (Ok. They are also my relatives😂).
  • Try Smartkodi (how it works video here) .. SmartKodi is an all-in-one property management software that does everything from lease management, automated rent invoicing and receipting, utilities tracking and management, a comprehensive accounting system and so much more! Talk to us.
  • We built Gated specifically for estate management.
  • @kodipoint at @tenzilabs we are piloting a similar product.
  • Check out RentPay.
  • Nyumbani – talk to us.
  • Sapama.
  • Check out Safaricom bill manager.
  • Check out Kodisher by @mwangisk (who) can give more details about it.
  • KCB Group have a property management portal as well.

Konza and Smart City Solutions, post-COVID

This week, the Konza Technopolis Development Authority (Konza) hosted a webinar, with the theme was using digital technologies in the planning for the future of cities after coronavirus (COVID-19) has passed.  

It was unique in that it featured two of the original main movers behind Konza; Bitange Ndemo, the former Permanent Secretary in the Ministry of Information and Communication, whose’ brainchild was Konza and Mugo Kibati who was the Director-General of Kenya Vision 2030 Delivery Board, and Konza was one of their flagship projects.

The day’s main speaker was Jerome Ochieng, the current Principal Secretary ICT and Innovation who said it was exciting to see a planned city being built from scratch. He said that previous cities had traditionally developed services in silos, but this had led to high costs, waste, and duplication. But he said, going forward with Konza, and using smart cities planning and technology, they would be able to improve the quality and performance of urban living spaces, while reducing energy consumption, service management costs, greenhouse gas emissions. He added that COVID was one of the greatest advertisers of technology – to solve challenges we encounter and that such events will drive how the government will provide services post-COVID.

He highlighted they had been pre-occupied with building the necessary and extensive “basement” work of horizontal infrastructure at Konza- underground utility tunnels (for fibre, power, water and sensors), access roads for pedestrians, BRT etc. These would serve the current and future service needs of the smart city, but that once that was done, other construction projects would take off quickly.

At this stage, Konza, which is 30% done, will also host a permanent building of the national data centre that will be ready by year-end while the city will also host the Kenya Advanced Institute of Science and Technology, according to Konza CEO, John Tanui.

Mugo Kibati said we are now in an era of lower touch, and lower contact for all our interactions and this was happening through technology. Telkom Kenya, the company he now leads, is aiming to position itself to serve these current and future needs as, even after COVID ends, as some changes it has induced, will remain the norm and sustain long after the pandemic. he cited how residential homes now require more bandwidth as more people are working and schooling from home, ordering food and getting medical attention via telemedicine etc. He said that in smart cities, and with more data being generated, that require predictability and planning, telcos will have to move up the value chain to be part of that future.

Bitange Ndemo said that when Kenya did the open data initiative, they had to host a lot of data outside of the country, but that this would not happen any more now that there is a data centre at Konza. He highlighted how there would be opportunities to use data locally to upscale SME’s.

Adam Lane, Deputy CEO Government Affairs at Huawei Kenya, said that Konza will have an intelligent operation centre, comprising network, cloud, platform and then apps, that will provide management for the smart city, like other centres that Huawei has built. He said that on a smart city street, you do not have a pole for lighting, a pole for electricity, a pole for telecommunication etc.

Konza and Smart Cities in Kenya

This week saw a webinar on August 3 hosted by the Konza Technopolis Development Authority on the planning and growth of smart cities.

It featured governments speakers and urban planners led by Jerome Ochieng, the PS for ICT and Innovation and Dr Chris Kiptoo PS, Ministry of Environment and Forestry, along with Eng. John Tanui, the CEO of Konza, Dr Shipra Suri of UN-Habitat, Juliet Rita of the Architectural Association of Kenya and Karen Basiye, Head of Sustainable Business at Safaricom.

Others were John Kabuye of the Kenya Green Building Society, Enosh Onyango of the Nairobi Metropolitan Service (NMS), Ambassador Njambi Kinyungu from the Ministry of Foreign Affairs, Demola Olajide of UNFPA and Annah Musyimi of Konza – and was moderated by Constant Cap.

Excerpts on the different themes . .

Sustainable Urban Development and Environmental Conservation:

  • Nairobi has had rapid population growth and rapid urbanization – this has led to waste from mushrooming informal settlements mushrooming being discharged into rivers, dysfunctional sewers, industrial waste flowing into rivers with no treatment, overflowing manholes etc. – PS Kiptoo
  • The ecological footprint of cities extends way beyond their administrative boundaries – taking in resources and giving back waste. This has to change and things like urban agriculture are important to foods security and bringing down heat levels – Shipra
  • As part of Safaricom’s plan to be a net-zero company, they committed to plant 5 million. They joined with KFS where in planting trees at South Marmanent where they have empowered communities to do more planting. To date, they have planted half a million and will extend to tree projects to Kieni, Busia, the Mau and Mombasa – Karen
  • Urban settlements must factor in issues of the environment – John Tanui
  • Konza has been designed using a “stitch & band approach” and its developments parallel to Mombasa road have green (forest and wildlife) corridors- Annah
  • NMS identified 153 discharge points and shut them down. Also of 110 illegal dumping areas, 87 have been cleared – Enosh
  • We comingle waste, but when we separate it, we get value – Kabuye

Designing Infrastructure for Sustainable Outcomes:

  • Konza is being developed using smart city principles; each plot has its use (commercial, education, industrial, wildlife conversation), and it is being developed in phases so it grows as its population increases to eventually reach 200,000 people – PS Ochieng.
  • This is the best time now to talk about sustainable cities. The degradation of nature and land-use changes are increasing the risk of pandemics; we are paying the price of unsustainable consumption of natural resources – PS Kiptoo
  • At UN-Habitat we aim to learn from global principles and norms for Kenya to emulate – Njambi
  • Business and residential associations don’t have anyone who looks at sustainability. That has to change – John
  • If a city does not produce better outcomes, we can’t call it smart – Constant Cap
  • UN-Habitat believes people should be the focus of smart cities programs. The goal is not to go high-tech, but “smart” means you are responsive to people, think ahead and take everybody along – Shipra
  • Konza meets the needs of the current generation without compromising the needs of future generations – PS Ochieng
  • We need urban spaces that are responsive to achieve urban dimensions of the SDG’s – Njambi

Smart Solutions for Urban Planning:

  • On Internet of Things (IoT), Safaricom has done smart-metering of aerial water meters with SHOFCO in Kibera (residents buy water with their phones). They are working on IoT for the PSV sector and with UNEP, are monitoring air pollution levels in Nairobi – Karen
  • Konza has been running innovation challenges on COVID and has received 516 submissions from all the 47 counties – Annah
  • Plans are not implemented because many are only prepared as a legal requirement; they are not people-oriented to give solutions. They also require changes in land use and policy, but the country’s system of land ownership makes it hard to have changes – Juliet
  • In the developed world, unless children go back to school, parents can’t go back to work. But Africa has other caregivers in the home – Demola
  • During COVID, people have locked up in spaces that were supposed to be their homes, and this had resulted in social problems – Demola
  • COVID has been the biggest advertisement of the need for well-planned and well-managed urban spaces – Shipra
  • Riparian encroachment by buildings, garages, car washes and eateries come about from not planning well – PS Kiptoo

Urban Planning in Smart Cities Management:

  • Digital streaming and collecting data using IoT will enable Konza to make real-time decisions on transport management, smart environment monitoring, smart metering water & energy – PS Ochieng
  • You can’t manage what you can’t measure. The Kenya Green Building Society has come up with a tool measure performance of buildings, neighbourhoods, and cities in terms of energy, water, waste, human experience and transportation. They have also donated sensors to Mbagathi and KEMRI to measure Co2 emissions and carbon monoxide – Kabuye
  • Planning is still very relevant. We have seen what COVID has done to cities as it is an urban-centric disease – Njambi

Conclusion: The mistakes of Nairobi’s sprawl are not unique, as Sub-Saharan African cities are the fastest-growing urban areas. It is envisaged that the smart planning and design at Konza and the use of IoT to manage the community and environment will make it a sustainable place for a population of 200,000 people. It will accommodate 30,000 residents, 17,000 who are anticipated to work in the complex.

The webinar ended with a call by PS Kiptoo have Konza set the pace for all other cities in the country to “go smart” while PS Ochieng asked more Kenyans to visit Konza to see the ongoing developments and to add to the 10,000 seedlings that will be planted every year there for the Technopolis and community.

Konza, Urban Planning and Smart Cities

Nairobi is home to over 4 million people jostling to earn a living in the hub of Kenya and the Eastern Africa region. It takes many aspects to plan, manage, develop, run and conserve a city like Nairobi sustainably, but the Covid-19 Pandemic has evolved to be an urban crisis, forcing city managers and investors to reconsider their plans and roles.

Covid has also made some people reconsider what urban spaces mean to them, their families and their careers. On one webinar in May 2020, a partner at McKinsey said that Covid has brought “work from home” forward by ten years, and many residents are making decisions whether living in cities is the best use of their time and economic resources. Is it time to leave Nairobi?

The Konza Technopolis Development Authority plans a city that the traverses three counties of Machakos, Kajiado and Makueni, with a 10 kilometer buffer-zone around it that encompasses 68,000 acres.  Today’s newspaper also mentions the plan by the Nairobi Metropolitan Services to rehabilitate and run a 75-kilometre railway line between Konza and Nairobi as one of the routes in their commuter rehabilitation project that will also improve access to the Konza Technopolis.

As Kenya needs even more planned cities, join a webinar with managers and experts on the future of smart cities, and the economic use of resources. Through this webinar, Konza aims to bring together key stakeholders in the urban management, design, planning, the environment, and policy to discuss these post-Covid issues. RSVP here.