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.
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.
Dalberg has released a report titled Kenya’s Digital Economy: A People’s perspective. It finds that, in terms of digital transformation, Kenya is a lower-middle/income country that shows some characteristics of a higher middle-income economy.
The survey is based on in-depth responses from 2,456 people in Kenya’s 47 counties. It was done in 2020 to assess their perceptions on the state of the supporting ecosystems, digital infrastructure, enabling resources, applications and services.
The report differentiates between the uptake of “basic” digital services (sending money, buying airtime/data) and “advanced” digital services (e-commerce, paying for goods and services – health, education, agriculture, supporting livelihoods). It notes that some challenges to the next step of Kenya digital economy including exclusion and digital safety (fraud/harassment, cybercrime when using devices).
A stunning finding is that there is a low demand for advanced digital services, beyond mobile money, digital communication and social media. This is because non-users and 30% of current basic digital users do not find digital products or applications that are relevant.
Some of the sectors it touches on:
Agriculture: Kenya is one of the most advanced agri-tech markets with approximately 30% of agri-tech startups in Sub-Saharan Africa operating here and with 18% having their headquarters in the country But the awareness of landowners of digital services is low. 45% of those surveyed are not aware, while just 13% use digital services for their livelihoods – mainly to communicate with customers, suppliers and vendors while 10% use it for inputs and 15% for knowledge sharing. Half of those who do, use it as a result of assistance from field agents who are strong support factors for rural digital economies. Also half of adult female farmers face challenges in affording devices and accessing the internet which makes them hard to reach with interventions.
Health: There is low use of digital health services with only 15% of respondents aware, and of those, 35% use it mainly to consult health workers and pay for medicine with mobile money. The challenges cited are high costs and mistrust of doctors they can’t see while a quarter are concerned about sharing health information online.
Ecommerce is urban: 23% use e-commerce in urban areas compared to 9% in rural ones, and in Nairobi and the central region, uptake (24%) is twice as popular as in other counties in the rest of the country where it ranges between 1-12%.
On Financial Access:
Mobile Money has (+) and (-) aspects. The usage of mobile money is near-universal with 95% of lower-income and 93% of rural people using it as Kenyans have good user experiences with it, unlike some other countries. And while there have been concerns about fraud, 80% have trust in mobile money, but also 53% cite high costs as a reason not to use mobile money, more so with lower-income Kenyans.
Easy Credit: The report cautions that government should watch for debt traps from increase ease of digital credit in the country. Half of the respondents have had to sell assets, borrow more or reduce food & education expenditure to repay a loan – and this increases the chance of financial exclusion. Also, basic digital users lost an average of Kshs 1,470 to fraud while advanced users lost twice as much (Kshs 2,996) over the past three years. This is a risk that can grow as more unexposed people turn to advanced services and may face devastating losses that they cannot absorb.
Social safety nets: People with government stipends or pensions are more likely to use e-government services (such as eCitizen, iTax NHIF) than other Kenyans in general.
Entrepreneurs use it little: Among self-employed and business owners half use digital services and mainly for basic reasons like communicating with customers and vendors. Only 15-18% use it for advanced reasons like keeping business records, tracking stock, paying taxes, selling services and buying supplies through e-commerce platforms.
The report by Dalberg, done with support from the Omidyar Network, along with its data sets, can be downloaded here.
KPMG East Africa has a summary of some tax proposals in the Finance Bill that will be used to plug the country’s ambitious Kshs 3.6 trillion 2021/22 budget.
Here are some excerpts
Depositories are to enhance the identity of investors i.e buyers and sellers of securities.
Creation of post-retirement medical funds in retirement benefits schemes.
Clarifies the definition of an infrastructure bond.
A capital markets tribunal shall deal with matters before it within 90 days.
Moving from 16% to exempt after July 1, 2021, are the transfer of assets into real estate investment trust (REIT’s) and asset-backed securities.
Opens up reinsurance to players other than Kenya Re to certify reinsurance contracts.
Opens the door to private electricity companies; no longer required to offer their supply to the national grid and they are eligible for investment deductions. Also, if government licenses them, they can compete with KPLC.
Tax cases will not stop where there is an ongoing criminal or civil case.
Abolishes the amnesty on rental income tax before 2013 (which had since expired).
Rewards for informing on tax dodgers; The Kenya Revenue Authority (KRA) can reward up to Kshs 500,000 (up from 100,000) for information and up to 5% or Kshs 5 million of taxes recovered.
Taxpayers are to keep records for 7 years and KRA can assess claims of up to 7 years from the date of a taxpayer’s last return.
Digital Taxes and market
PIN’s required for digital marketplace transactions.
Digital service tax is removed from residents (only applies to non-residents).
Non-resident businesses can maintain records in convertible currencies (not necessarily Kenya shillings).
To stop base erosion and profit shifting, multinationals / ultimate parent companies are required to file a report on their activities (revenue, profit, taxes paid, employees, assets, cash) in Kenya within 12 months of their financial year-end.
Ends group VAT registration for groups of companies; each entity will report its own VAT on transactions.
To encourage large investments, there is an exemption for import declaration fee (IDF) and railway development levy (RDL) for investments over Kshs 5 billion or with the approval of the Treasury Cabinet Secretary.
Value Added Tax
Introduces VAT on bread.
Several items move from 16% to exempt, which means the Treasury CS can exempt them on request. These include infants foods, medical ventilators, lab reagents, gas masks, x-ray equipment, anti-malaria kits and doses, and artificial body parts.
Also moving from 16% to exempt, are vehicles for oil & mining companies, and equipment for solar & wind generation.
A 20% betting tax returns after being briefly for a year.
Bank loan fees no longer incur excise duty.
Remove a requirement for VAT regulations to be approved ahead by Parliament; instead they will be shared with legislators under the statutory instruments Act.
Withholding tax in oil and mining sectors will be 10%
Removes the 10 year limit on carrying tax losses
Excise tax goes up on motorcycles and is introduced on jewellery and nicotine substitutes.
Reintroduces excise duty on locally-manufactured sugar confectionery and white chocolate that was removed in 2019.
As part of their one-year anniversary celebrations, Absa Kenya has invited people to write in on “Wall of possibilities” of community-uplifting things that they would like to Bank to fund. Each idea may get up to Shs 2.5 million and the deadline is 5 March.
Antler Global is seeking new startup companies to support with funding and mentoring. The Nairobi deadline is in April, and here’s a glimpse of the 2020 cohort at Antler.
Nominate the Woman Entrepreneur You Admire Most to the COMESA 50 Million African Women Speak Platform.
DFC, the U.S. International Development Finance Corporation is offering financing of between $3 million and $50 million to African companies in support of the continent’s COVID-19 recovery – via Asoko.
The Forbes Africa30 Under 30 Class of 2021 in categories for creatives, sports, and business and technology. Deadline is March 31.
Apply for the 2021 Global Teacher Prize ($1 million) and the new sister award, the Chegg.org Global Student Prize ($50,000). Deadline is 30 April.
The Hack the Normal hackathon takes place between 5 – 7 March 2021, invites participants to develop new products, services and business models with commercialization potential in these businesses and create solutions for financial challenges, sustainable living and healthy living.
The new Kikao64 co-working hub at Eldoret has 50% discount for non-profits, athletes and startup businesses, while others who sign on through the end of April 2021, get discounts of 25%.
The Konzainnovation challenge offers $5,000 of funding for startups to pilot their innovations at the Konza Technopolis. Deadline is March 19.
edit The Communication Authority of Kenya 2021 Kuza Awards rewards excellence in broadcasting. Regulatory awards are for compliance, local content, children & broadcasting, regional broadcaster, upcoming broadcaster and copyrights. Also, People Choice awards for favorite radio station, TV station, pay TV, news Radio station and TV station. This year has a theme for “Preserving our Heritage through Broadcasting (Kenya a Heritage of Splendour)”, and there is a Patriotic Award category with awards for Uzalendo Award (airing announcements on Covid-19) and Mzalendo Mkuu Award (educational content). SMS Kuza to 15601 to vote for free.
Mask Art awards are open to schools and young people under 25 in categories of the school of the future, young entrepreneur and environmental activist. Deadline is April 1.
The East Africa Maritime Awards (EAMA) recognize and award notable users of the Port of Mombasa. Organized by the Kenya Ports Authority, it is open to shipping, ports, services, engineering, and leisure marine industries with operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC). The deadline has been extended to March 31.
edit From the MasterCard Foundation comes the Baobab’s Got Talent challenge, an exciting storytelling opportunity for young creatives (animation, graphic design, video production) in Africa. Deadline is March 15.
From MIT Solve, the 2021 Global Challenge and Solve’s first US Challenge on Antiracist Technology are now open. Anyone anywhere can submit a solution to become part of the 2021 Solver class and access more than $1.5 million in funding.
The National Museums of Kenya is seeking historical memorabilia on Kenya, from the year 1800. The items, including photos, film, memorabilia, weapons, musical instruments, farm tools, art, newspaper cuttings, passbooks, etc. can be donated or shared on a long-term loan basis. The deadline is 19 March.
For the presidential candidate at ODM, the party is seeking a committed, passionate disciplined and dependable party member who can mount a successful campaign. The entry fee is Kshs 1 million and with a reduced amount of Shs 500,000 for women, youth or persons with disabilities. Deadline is 31 March.
Post Office boxes are available across Kenya. Pick one up by March 31 and get a 30% discount.
editSEED, the Stanford Institute for Innovation in Developing Economies, partners with entrepreneurs (CEO’s / founders) in Africa and South Africa emerging markets to build thriving enterprises that transform lives. Applications deadline is April 15.
editThe Eastern and Southern African Trade and Development Bank (TDB) and Asoko Insight have launched a Renewable Energy DealRoom to accelerate the financing of renewable energy projects in the region served by TDB.
The Thunderbird School of Global Management is offering a unique scholarship for Africans to attend the online Masters of Applied Leadership & Management with a specialization in Public and Global Affairs starting on March 8, 2021. African students will pay a special tuition of $12,000, compared to $33,000 for other students, representing a scholarship of $21,000.
The Tony Elumelu Foundation has the seventh round of its entrepreneurship program in which, with partners, they are seeking to boost 1,0000 businesses and also assist others to recover from Covid-19. This year, 1,000 businesses will receive $5,000 in seed capital, business training, mentorship, and global networking opportunities. Apply before March 31.
edit The Visa Everywhere Initiative targets fintechs to join a global innovation program. Apply by May 7.
edit Nominations for the Africa Food Prize 2021 are ongoing, a $100,000 celebration of African agriculture achievers.