Topical Feature: Joint Ventures in Kenya Real Estate Market – The essentials of JV deal structuring, and risks management measures, and Weekly Report #13/2021

A look at Joint Ventures in Kenya Real Estate Market, and the essentials of JV deal structuring, and risks management measures for Investors:

For the past two decades, the Kenyan real estate market growth rate has been modest, as evidenced by its contribution to the country’s GDP, which grew from 10.5% in 2000 to 12.6% in 2012 and 13.8% in 2016, 7.1% in 2017, and 14.4% in 2018.  Furthermore, Real Estate Investments remain an attractive investment opportunity due to the relatively high returns exceeding 20% for investment-grade real estate compared to traditional investments like equities and government securities, such as bonds.

This has seen the acceleration of the development of affordable housing units – Apartments and stand-alone housing units, recreational facilities, healthcare facilities, mixed-use developments, and godowns by both individual and institutional investors. Nevertheless, the successful development of these real estate projects is complex and requires huge capital, many inputs, and risk management strategies. Most investors lack either of these inputs or the expertise required to deliver a successful real estate project.

To bridge the gap, Joint Venture (JV) or Real Estate Joint Venture Model is formed, enabling real estate investors to tap into the fast-evolving Kenya real estate market. Joint ventures help reduce the cost of finance (interest) for the developer (Sponsor) so as to maximize returns on investments and increase operational efficiencies.

What is a Joint Venture (JV)?  

Real Estate Joint Venture in KenyaA Joint Venture (JV) is a real estate business arrangement in which two or more parties agree to pool their real estate resources together for the purpose of accomplishing the project’s investment objective, this being gaining a return on investment from their individual resource contribution into the project. The resources may include land, finance, or technical expertise. A Joint Venture (JV) can take any legal structure through a Special Purpose Vehicle, be it Corporation, Partnership, Limited liability companies, and other business entities.

For a Joint Venture to be successful and for risks to be mitigated, the following are the key essentials of a JV deal structuring:



Feasibility study.

A feasibility study is the first Key essential to a JV deal structuring. The project’s viability is established upfront through a feasibility study, which also showcases the rate of return of the intended project, the cost-benefit analysis, and risk analysis. The project sponsor could conduct the feasibility study through a Real Estate Feasibility Study Consultant at the initial conceptual stage of the investment.. The project sponsor is the person or group that owns the project and who takes the overall accountability for the project, most of the time being the landowner or Real Estate Investment Management Company.

Business Plan, Investment Capital Structure, and waterfall Model

From the feasibility study outcome, the project sponsor prepares the project’s Real Estate Investment Business Plan. Real Estate Business Plan showcases the proposed design concepts for the venture, associated costs for the project, implementation and operational methodology, marketing strategies, as well as risk mitigation strategies. The Business Plan also shows a Capital Structure of how the project sponsor intends to fund the project and the investment stake he/she proposes to offer to the investor partner.

Additionally, the Business Plan showcases how proceeds from the project shall be paid out to both the sponsor and the investor as the return of capital invested into the project, as well as payment of preferred returns and residual cash flow to both the Sponsor and the investor.

A Joint Venture Agreement and Investment Memorandum

A Joint venture may bring up conflicts between partners in the course of the undertaking if legal aspects are not handled well. As such, a lawyer and Financial/Investments Real Estate Consultant are incorporated to help in coming up with and documenting the Joint Venture Agreements outlining the terms and conditions of the investment development projects and a memorandum of understanding covering issues like communication protocol, confidentiality and conflict resolution. This document is sometimes referred to as Investment Memorandum, of which the sponsor can either decide to prepare before the Investor Partner comes into the project or after the Investor Partner has come into the negotiating table.

The Joint Venture Agreement (JVA) or Investment Memorandum addresses the following issues:

i.) The purpose of the venture and the type of project to be undertaken

ii.) The structure of the Joint Venture, either contractual or a separate business entity.

iii.) Ownership of intellectual property created by the joint venture

iv.) The development approvals and responsibility of the same between the Sponsor and the Investor.

v.) Profit, liability, and loss sharing

vi.) Project timelines

vii.) The roles and obligations of partners, shareholders agreement, and profit and returns sharing methodology.

viii.) The modes of making decisions, project finance, and taxation

ix.) Termination and Exit Methodology of the Joint Venture once the objective of the project have been met.

Technical Due Diligence for risk management

The due diligence entails reviewing the Sponsor’s Business Plan in relation to market dynamics of supply and demand, as well as reviewing all legal standings regarding the ownership of the property and all previous transaction on the property. The technical due diligence enables the investor to confirm on the project particulars included in the Business Plan, as well as the viability of the project in order to mitigate any risk that might accrue.

The Bottom Line

A real estate partnership is a great idea for those who may have some gaps in their real estate knowledge, experience, or funds. Besides, a real estate JV improves chances of success to a project and guarantees profitability. It is nevertheless crucial for the Project Sponsor to research the partnering entity or Investor to make sure that they are compatible in terms of performance, expertise, level of commitments, reputation, financial status, and creditworthiness. The project sponsor should analyze each investor partner’s comfort and adaptability to the project technology as well as the skills required. The parties should also be clear about the purpose of forming the joint venture, the individual party’s aims, and visions so that all undertakings in respect to the Joint venture are in line with the stated objectives. Therefore, the project sponsor should evaluate the skills, market knowledge, and the final commitment to the ultimate goal by the investor party they are willing to enter with or invite into a joint venture. Essentially a good partner brings to the table what the other party lacks, whether it’s access to capital or market experience in the preferred real estate investment area.

Buildafrique Consulting Group is a specialist and expert in Joint Venture Structuring in Kenya, Real Estate Project Finance and Capital Raising,  conducting Real Estate Feasibility Studies, Development Project Management and Consultancy Kenya for real estate investment projects.






i.) Diaspora remittance fell to a 3-month low in February 2021

According to the latest data from the Central Bank of Kenya (CBK), foreign remittance fell to a three-month low in February 2021 to Ksh.28.6 billion – a second consecutive decline since January 2021. The cumulative inflows in the 12 months to February 2021 totaled Ksh.347 billion, denoting an increase of 11.4 percent compared to Ksh.311.2 billion in the 12 months to February 2020. The data indicated that February 2021 remittance inflows were 18.9 higher than remittance in February 2020, which stood at Ksh24 billion.



ii.) Private sector credit growth surges to a near five-year high in 2021.

According to the latest monthly economic indicator report by the Central Bank of Kenya, credit to the private sector grew at its fastest pace in four-and-a-half years in January 2021, reflecting the continuing recovery of the economy from the Covid-19 induced slowdown of 2020. The report indicated that private sector credit grew at an annualized rate of 9.3 percent in January 2021, the highest growth rate since June 2016. The highest growth was recorded on the consumer durables segment at 18.7 percent, with loans to agriculture, transport and communications, manufacturing and finance, and insurance also recording double-digit annual growth.







iii.) President Uhuru Kenyatta locks down Nairobi and four other counties over coronavirus surge

On Friday, 26th March 2021, President Uhuru Kenyatta ordered cessation of movement into and out of Nairobi, Kajiado, Machakos, Kiambu, and Nakuru effective Saturday, 27th March 2021, describing them as ‘disease-infected areas’ that are accounting for over 70 percent of Covid-19 infections. The stiff measures come in the wake of a spike in Covid-19 infections as daily positivity rates average 20 percent from an average of 3.1 percent in January 2021 as the country faces a third wave of the pandemic. The government also banned all assembly sessions of the National Assembly and county assemblies in the five counties, as well as all social gatherings and in-person meetings, and lengthened curfew hours to start from 8 pm to 4 am.



iv.) KAM urges the government to harmonize laws to drive competitiveness

The Kenya Association of Manufacturers (KAM) has urged the government to harmonize laws, policies, and regulations at the national and county levels to drive the local industry’s competitiveness. Speaking during the launch of the Regulatory Audit Report, 2020, KAM Chair Mucai Kunyiha noted that while regulations seek to create a level-playing field for businesses, regulatory overreach hinders the competitiveness of the local industry. According to KAM, review and alignment of overlapping mandates, regulations, and roles in the sector will reduce the manufacturing sector’s cost by 28.9 percent.







i.) Construction of student accommodation near USIU suspended after an accident

Acorn Holding, a student hostel developer, has temporarily suspended construction activities at its project near the United States International University Africa (USIU-Africa) after two fatalities in a site accident on Monday, 22rd March 2021. The construction has been put on hold for four weeks until investigations into the incident are completed. According to Acorn holdings, the project, which is 70 percent complete at the time of the accident, had completed the super-structure.





ii.) Construction of residential development under the Tilisi Living brand complete

The construction of residential development under the Tilisi Living brand that started in 2019, Tilisi View, is now complete. Phase one of the project has seven types of villas of eight, four, three, and two-bedroom units per acre, with some having three, four, and five bathrooms. According to Tilisi Developments Co-Chief Executive Ranee Nanji, the three-bedroom units with two bathrooms are selling at Sh21.5 million and the highest, which are five-bedroom villas at Sh67 million on cash pay with six months installments. Mr. Nanji further noted that the above prices are adjusted to Sh23 million and Sh69 million on mortgage terms, respectively.



iii.) Construction of the Ksh132 billion Ugatuzi tower to continue

On Friday, 26th March 2021, the High Court gave the Council of Governors the green light to construct the multibillion-shilling Ugatuzi Tower along Chaka Road in Hurlingham, Nairobi. While dismissing the petition to stop the construction of the tower by the Kenya County Government Workers Union, Justice Weldon Korir noted that the petition lacked basis. The union had petitioned the court to stop the board of trustees of the Local Authority Pension Trust and the County Pension Fund from committing any funds to the construction of the proposed building on a prime plot that belongs to the county workers’ pension fund. The 50 storey building, which is estimated to be the tallest on the continent, will be built through a partnership between the CoG, the CPF and Laptrust. The building is expected to house the Council of Governors’ offices, county satellite offices, County Assemblies Forum offices and the Ministry of Devolution and related state agencies.



iv.) Kenya completes it’s 10-year master plan for Science and Technology Parks complete

On Monday, 22nd March 2021, the Principal Secretary State Department of University Education and Research Simon Nabukwesi reported that the state had completed a 10-year Master Plan for Science and Technology Parks (STPs). The PS noted that the government had developed designs for the pilot STPs at Konza Technopolis and Dedan Kimathi University of Science and Technology. He further noted that the state is currently at the procurement stage for design consultants and construction supervisors for prioritized laboratories within the programme.







i.) Management of Boma hotels taken over by a Dubai based company

A Dubai-based hotel management company, Aleph Hospitality, has signed management contracts for three hotels in Kenya under the Boma brand.. The hotels include the Boma Nairobi, Boma Inn Nairobi and Boma Inn Eldoret, which are owned by Red Court Hotel, a subsidiary of Kenya Red Cross Society. According to Bani Haddad, Aleph Hospitality Managing Director, the company will be donating a percentage of fees it earns from the hotels to the Red Cross as part of the agreement.




ii.) ILAM Fahari Reit profit dips 16pc

ILAM Fahari I-REIT, the only listed property fund in Kenya, posted a 16 percent fall in profit for the year ended December 2020, attributed to the revaluation of real estate property in 2020. The company’s net profit stood at Sh148 million compared to Sh175.2 million recorded in 2019. The firm’s distributable earnings reduced to 74 cents per unit to Unitholders as compared to 80 cents per unit in December 2019. According to ICEA Lion Asset Management Chief Einstein Kihanda, the real estate market was hard hit by Covid-19 pandemic, with most tenants, especially in the retail sector, facing the biggest challenges. He further noted that the resultant closure affected business for the other tenants as a result of reduced foot traffic.



iii.) Nairobi office rents cheapest in Africa

According to a new report by Knight Frank, Nairobi’s office space prices plummeted by 13 percent in 2020, making Kenya’s capital the cheapest among top African cities. The report indicated that Nairobi’s office space, on average, went for a sale price of Sh1, 308 per square foot in the second half of 2020, down from 1,478 amid the Covid-19 economic fallout. That compares to Kinshasa (Sh3, 815), Accra (Sh3, 052), Johannesburg (Sh2, 009), Cape Town (1,860), Addis Ababa (Sh1, 744), Dare Salaam (Sh1, 635), and Kampala (Sh1, 526). The report also indicated that the average occupancy rates across commercial offices recorded were 72 percent in the same period, attributed to the lock downs which led to shut-downs, affecting businesses’ ability to pay rent, increasing office vacancy and leading to the fall in rents.


iv.) Real estate investors top the list of loan defaulters

According to data from the Central Bank of Kenya, real estate investors top the list of loan defaulters as of March 2021. The data shows that the defaults on real estate investment loans such as mortgages rose by Ksh 5.1 billion to Ksh 57.7 billion by the end of 2020. The rise in the loan defaults is attributed to the mass firings and closure of businesses, which resulted in reduced income for property developers affecting their loan repayment plans.






The following are Kenya Real Estate and Development Trends are influencing Investment Decisions in Kenya Real Estate Market.

i.) Demand for smaller retail spaces increase amid the Covid-19 pandemic

Covid-19 restrictive measures in 2020 continue to drive enterprises and SMEs to reduce the working spaces amid tough economic conditions. Furthermore, the acceptance of online shopping sites on websites and social media platforms (for example, Facebook, Instagram and Twitter) also informed the decision. Most tenants do not require large spaces in formal malls or use them as pick-up or drop-off points for deliveries.

As demand for larger spaces continues to dwindle, requests for smaller units continue with upward growth. This has driven building owner’s to repurpose large spaces that single tenants left into stalls. An example is the Reli Co-operative House and defunct Tuskys Magic in Nairobi CBD, which have been converted into stalls. Currently, building owners are interested in guaranteed income, as smaller units (stalls) translate to about 90 percent of rental income compared to a single tenant.

According to BuyRentKenya chief executive officer (CEO) Elizabeth Costabir, stalls are becoming popular as they are affordable in terms of monthly rents. She further notes that with many units, at least 80-90 percent of the rental income can easily come in easily compared to one large retailer meeting the rent payment and sustaining it for a long time. Furthermore, Knight Frank Kenya Retail Portfolio Manager Ashmi Shah reckons that stalls reduce the risk of reduced income if one or few tenants decide to leave. He further noted that their outlay is also lower compared to the malls to allow a variety of trades in the same space to give shoppers more choice.


ii.) More Nairobians move to gated communities amid the Covid-19

Amid the Covid-19 pandemic, more Nairobians are moving to gated estates as they escape the densely populated zones where chances of infection are high. More Nairobians are also in search of privacy, protection and prestige.

The trend has come in handy for real estate investors who have realized home buyers no longer just buy a home but a lifestyle, which gated communities provide. According to Knight Frank, in its latest wealth report, the need for privacy, more outdoor space, and relatively lower prices has made the purchase of houses in gated communities to increase.






The following are Global Real Estate and Development Trends are influencing Investment Decisions in Kenya Real Estate Market.

i.) Plans to cut back on offices reduce in major cities globally

A new survey by the global accounting firm KPMG indicates that most major global companies no longer plan to reduce their use of office space after the coronavirus pandemic, though few expect business to return to normal in 2021. According to the survey, 17 percent of chief executives plan to cut back on offices, down from 67 percent from the survey conducted in August 2020. The survey indicates that downsizing has already taken place, or plans have changed as the impact of extended, unplanned, remote working has taken a toll on some employees.

According to the survey, many offices in London, New York, and other western cities have been vacant for months after health authorities ordered staff to work from home where possible, but with the roll-out of vaccines, some firms are planning to reopen while others have already reopened. In Kenya, most firms that had reopened in January 2021 are looking to close, while some will downsize following the government directive on Friday, 26th March 2021. As such, the occupancy rate in Kenya offices will continue to plummet, affecting the office sector’s cash flow.

The survey, which took place between 29th January 2021 and 4th March 2021, covered 500 firms with sales of over 500 million dollars based in 11 countries, including the United States, China, Japan, Germany and Britain.


ii.) Demand for golf real estate increases globally

A global increase in demand for green spaces, wellness, and the opportunity to work from home is driving new interest in golf properties in the wake of the Covid-19 pandemic. Most buyers are leaving cities to golf resorts for their nature, fresh air and five-star services.

According to a new international audit by European Tour Destinations, a network of 30 world-class golf venues, consumer behavior shifts to golf properties are emerging trends in the global real estate.

According to the audit, Dubai and UK property buyers now account for 40% of real estate sales in golf estates, an increase of 10% year-on-year. In Portugal, the number of domestic buyers in golf estates has nearly doubled from 11% to 20% year on year, as of 2021.

The European Tour Destination further highlighted that golf property buyers are increasingly from local and domestic markets, often quitting city homes and making their purchase a permanent home rather than an investment. In Kenya, these residential communities are not yet appreciated due to their high-end nature, with most home buyers going for affordable housing units in mid-end communities.




Real Estate Finance and Capital Raising Solutions in Kenya.



One of the major challenges to many Real Estate Investors and developers in Kenya is roping-in Finance into their development projects, in order to bridge the finance deficit occasioned with not having all the finance to meet the project Budget or deficit.






There are various forms of Real Estate Finance and Capital Raising solutions in the Kenya, and in particular those offered by Buildafrique Consulting Group, common being:


a.) Equity Finance: Equity Finance is occasioned for joint venture structured project, where the project sponsor and the investor bring resources together in an investment model that manage various risks in the investment project, and provide returns on investment for both the project sponsor and the investor.


b.) Contractor Debt Finance: This is a modern real estate finance model whereby the Contractor comes into the project as both the Building Contractor and as an Investor in two separate contracts for managing the two forms of engagement. The investment could be in the form of materials, labour, or expertise bought in the project. The Contractor is paid either through proceed from the investment or through equity stake in the project.


c.) Institution Debt Finance: This is a form of real estate debt that is offered by various real estate debt fund and management institutions, other than banks. The debt fund is available both locally and internationally.


d.) Bank Debt Finance: Bank debt finance is the form of real estate finance that can be provide by your local or international bank, either as project finance, or personal finance against your balance sheet. Most banks shall require a collateral as security for the debt.


e.) Pre-Sale Finance: Pre-sales finance involve raising part of real estate finance through off-plan sale of the development units or products. The financing model however requires the developer to meet the other part of finance deficit through other financing models to avoid financial risks in the project associated with stalling of the project due to inadequate finance.


f.) Consultancy Services Finance: In this form of financing, Project Consultants contribute their professional expertise as equity into the project, and whereby they own a stake in the project in exchange for their professional contribution in the project. This is common in Joint Venture structured project, whereby the project sponsor may not have all the financing the pay the Consultants at the initial stage of the project.


g.) Islamic Finance: Islamic finance is Sharia-compliant real estate finance that adhere to Sharia law guidelines. In recent time, the financing model has been made accessible to both muslim and non-muslim.


Capital raising takes structured step process which includes a Consulting and Advisory Phase, Investor Relations Phase, Transaction Phase, and Implementation and Recovery Phase, across all form of financing.



The Consultant to engage for Project Finance and Capital Raising for your development project is a Project Finance Consultant.










What are the benefits of procuring a Contractor instead of a Fundi (Trade Technician) to undertake my construction project?











Recent rise in construction costs and standards of living has pushed developers and prospective homeowners to weigh other methods of procurement of building works, besides the normal prescribed method of procuring a Contractor to undertake the work. One of those options that has been preferred by developers and prospective home owners is the use of Fundis or Trade Technicians to undertake various trades of works in the construction works, out of limited information on the benefits of using a Contractor to undertake the works and the dangers posed by not using one.


Below are some benefits and merits to procuring the building works using a Contractor, as opposed to a Fundi (Trade Technician):

a.) Quality Assurance: – Projects undertaken by Contractor have quality assurance that is guaranteed through a contract agreement that is entered between the Client and the Contractor. This ensures check and balances on quality during execution of the works.

b.) Management of Risks: With a Contractor, you will not be worried about various risks related to theft and safety. The Contractor is required to process necessary insurance regarding safety of the workers and security of the materials, as well as the safety of the building.

c.) Save on Time: The developer of prospective home owner is also able to save on his or her time, by delegating the contracting part of the project to a contractor who contracts all the tradesmen and women in the project and manage their trade works.

d.) Cost Management: The Contractor always works with a defined budget, that is outlined in the Contract Bills of Quantities. Necessary cost control and cost checks are therefore involved throughout the work process for cost management.

e.) Adherence to the Law: The law of Kenya requires that all building projects be undertaken by qualified Contractor that are registered by the National Construction Authority (NCA). This is meant to bring check and balances in the construction industry, by ensuring that only qualified contractors undertake construction works.




This week’s focus on Development Cost Analysis is for Kiambu Town, this being residential and commercial area in Kiambu County. The Development type in this area according to the land-use and county zoning regulations includes Apartment Blocks, and Shopping and Retail Complex.

Below is an analysis of Construction Cost per Square Meter (SM), for the option of procuring the development project through a Building Contractor, or an option of direct procurement of the Materials and Labour through a Labour Contractor for recommended building types.




The Real Estate price analysis focus for this week is on land, sale, and rental prices for a 2 and 3 bedroom apartment in Kiambu Town – Kiambu County. The data were obtained through surveys, and analysis of asking prices on property listings in Nairobi.

i.) Sales price – Apartment and houses

ii.) Rent price – Apartment and houses

iii.) Land price per acre (commercial/residential)



T-bills recorded an oversubscription in the week ended 26th March 2021, with the overall subscription rate coming in at 115.0 percent, an increase from the under subscription of 94.3 percent recorded in the previous week.

The highest subscription rate was in the 364-day paper of 150.8%, an increase from 121.9% recorded the previous week. The 91-day and 182-day papers’ subscription rate also increased to 135.6 and 71.0 percent, from 108.8 and 60.8 percent respectively from the previous week.

91 T-bill rates increased by 0.016%, from 7.071% the previous week to 7.087%. CBK offered a total of Ksh 4 Billion, and bids amounted to Ksh 3.302 Billion, of which all was accepted. 182-day T-bill rate increased by 0.006 points from 7.884% the previous week to 7.890%. CBK offered a total of Ksh 10 Billion, and bids amounted to Ksh 3.070 Billion, of which all was accepted. The 364-day -bill increased by 0.046 points from 9.213% the previous week to 9.259%. CBK offered a total of Ksh 10 Billion, and bids amounted to Ksh 16.595 Billion, of which Ksh 12.665 Billion was accepted.

Liquidity in the money market remained stable, but the average interbank rate increased to 5.525 percent, from the 4.925 percent recorded the previous week. The increase was highly linked to the payments made towards the recently issued bonds’ settlements coupled with tax receipts, which were partly offset by government payments.



Investors’ trading confidence at the Nairobi Securities Exchange (NSE) reduced in the week ended 26th March 2021, evidenced by decreased trading activities. During the week, foreign investors assumed a net buying position by accounting for 50.68% of the total market sales and 75.54% of the total market purchases.

The NSE All-Share Index, NSE 20 share index, NSE 25 share index, market capitalization, total shares traded, and equity turnover, which are the main measures of the equity market’s performance, changed by -0.64%, -1.71%, -0.51%, +0.64%, +40.71 and +57.09%, respectively. The I-REIT turnover and I-REIT deals increased by 240% and 250%, respectively, majorly attributed to the economic recovery.



The Kenya Shilling strengthened against major international but weakened against regional currencies during the week ending 26th March 2021. The local currency remained relatively stable against the greenback, exchanging at 109.785 per US dollar on 26th March 2021, even as traders forecast a depreciation of the shilling due to end-month demand for the hard currency.

The usable foreign exchange reserves remained adequate at USD 7,344 million (4.51 months of import cover) as of 26th March 2021. That meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover and the EAC region’s convergence criteria of 4.5 months of import cover.



At Week #13 of 2021, the following are factors that will shape the Kenya Real Estate and Development Market in the next one week, for your Investments Risks Management:

i.) New Covid-19 measures in Nairobi Metro and Nakuru County (Zone 1)

On Friday, 26th March 2021, the government reimposed Covid-19 restrictions after the country’s positivity rate this week jumped to 22 percent, a 20 percent increase since January 2021.  The government banned movement in and out of Nairobi, Machakos, Kajiado, Kiambu and Nakuru counties, as well as public gatherings in these counties. Curfew hours were reduced from 10 pm to 8 pm, and all bars and eateries were closed till further notice.

As the directive is being enforced, the state is set to lose billions in revenue as economic activities are set to be derailed. The cessation and lockdown will further dent the operation of businesses, mainly the SMEs, which are expected to close down. The following are the other effects that this turn of events will have on the economy and the real estate market.

Retail Sector

In the next few weeks, people in neighboring estates will likely be seen doing panic buying, and hence more hoarding and increase in food prices is likely to be experienced, leading to inflation. Footage in retail food stores is expected to rise in the short-term, while footage in other retail shops, for example, those selling clothes, electronics, and other non-essential items, is expected to reduce significantly as households hold to their liquid cash. The stalls are also expected to gain more popularity due to reduced wages and, in some cases, loss of jobs which is expected to result in many people opening businesses to get income or to sustain their living.

Hospitality sector

The closure of all eateries and bars in the Nairobi Metropolis is expected to affect hotels negatively, as most are expected to close down. Cessation of movement is also expected to reduce domestic tourism, leading to a reduced occupancy rate in hotel accommodation.

Commercial Office

In Kenya, most firms that had reopened in January 2021 are looking to close, while some are expected to downsize following the directive. As such, the occupancy rate in Kenya offices will continue to plummet, affecting the office sector’s cash flow. The shut-downs are expected to affect businesses’ ability to pay rent, increasing office space lease breaks and hence the fall in rental income. As well, many firms in Nairobi are expected to shift to smaller fitted-out office spaces as flexible working patterns become the ‘new normal’. This is expected to force landlords to grant concessions on lease renewals which included cutting rents in a bid to attract and retain tenants.

Mass firings and businesses’ closure are expected to result in reduced income for property developers as lease breaks are expected to surge, affecting real estate loan repayment plans. More properties are expected to be auctioned, especially now that banks prepare to enforce loan recovery measures after the green light from the Central Bank of Kenya. Also, foreign investors who had prior plans to invest in the country’s real estate market are expected to shy away.

ii.) Restriction of domestic flights

The Kenya Civil Aviation Authority (KCAA) has directed the local airlines, with hubs in Nairobi, to ground flights from Monday noon after President Uhuru Kenyatta restricted movement in and out of the capital and four other counties, until further notice, to tame the Covid-19 spread. Budget airline Jambojet, a subsidiary of national carrier Kenya Airways, announced suspension of flights between Nairobi and Mombasa, Kisumu, Eldoret, Malindi and Diani from Monday, 29th March 2021.

Following that, cancellation of hotel bookings is expected to increase countrywide, and the number of local tourists is also expected to plummet. Countrywide, the Hotel occupancy rate is expected to reduce and hence the income.

As a risk management measures, Real Estate Investors are advised to enter into early negotiations with lenders for fair repayment terms to cushion the negative effects of the restriction measures on cash flows, for those whose properties are on collateral or financed by banks. Investment Opportunities are also expected to emerge on distressed properties, which also presents investment opportunities for speculative real estate investors who stand to gain once the markets recover after the lifting of the restriction measures.



i.) Webinar: Mortgage Accounting: Cash and Capital Preservation – The webinar will discuss accounting topics impacting mortgage lenders, including IRLC valuation methodology, techniques for cash flow forecasting, and tax liability implications.

Date: 7th April 2021

Time: 10:00 PM

Venue: Online

Event Organizer:




ii.) Conference: Architectural, Engineering, and Construction Forum – The conference will discuss topics in the architectural, engineering, and construction fields.

Date: 13th April 2021

Time: 9:00 AM – 6:00 PM

Venue: Online

Event Organizer:








Writer of the Report:

This Report is written by Buildafrique Consulting Group, Kenya multi-disciplinary consultancy, that offers END-TO-END DEVELOPMENT CONSULTANCY, REAL ESTATE, and PROJECT FINANCE solutions through specialized subsidiaries. Among our solutions includes:

  1. Feasibility Studies and Market Research.
  2. Project Finance and Capital Raising.
  3. Joint Venture & Finance Structuring.
  4. Project Management.
  5. Investment Design Appraisal.
  6. Quantity Surveying
  7. Construction Cost Consultancy
  8. Physical Planning and Planning Permissions
  9. Environmental Management and Impact Assessment
  10. Real Estate Development and Structured Investment Solutions
  11. Property Valuation
  12. Marketing and Property Sales Agency
  13. Property Management and Facility Management

Our Contacts:



The information contained in this report is for general information purposes only. While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information contained on the report for any purpose. Readers are therefore advised in all circumstances to seek the advice of Registered and Licensed professionals in all matters related to Real Estate Investment and Project Development.