Topical feature: Rent-to-Own Real Estate Purchase Plan in Kenya, and Risks Management Measures for Investors, & Weekly #30/2020

A look at Rent-to-Own Real Estate Purchase Plan in Kenya, and Risks Management Measures for Kenya Real Estate Investors.

The concept of rent-to-own (or Lease to Own) is a rental strategy with an option to purchase a rented property at the end of a predetermined period, or in the course of the lease period. The strategy, which is usually driven by a depressed state of the real estate market, has caught on in Kenya and continues to attract a good pool of middle-income earners. The concept is hinged on installment payments, where a potential home buyer makes monthly rent payments or even pays extra each month, with the added value held in escrow or escrow account. For instance, the landlord may charge a 20% above-market rent, with the difference counting toward the down payment or the home’s purchase price, which is called a rent premium or rent credit. In a rent-to-own purchase plan, the renter has underlying reason that they’re unable to obtain financing (for example, due to bad credit or lack of a sufficient down payment), yet they desire to be homeowners at the moment. Also, tenants opt for a rent-to-own purchase plan when they are about to lose their house due to a drop in income, or they have over-extended their credit.

The rent-to-own purchase plan has also proven to provide stable returns for the investors since the plan is not affected by the market downturns. The purchase plan also provides investors with great tenants who respect the property and are ready to take good care of the property, given that they plan to own it one day. Furthermore, even if the tenants back out of buying the house, the investor may be able to keep the option fee and rent premiums or rent credit. On the other side, the buyer is provided a property that fits their needs and budget. Buyers also get an opportunity to check out a location for a couple of years so that they’re confident that it’s the house and neighborhood they want for the long-term. It also allows potential home owners to own a home while growing their down payment and building their credit score. At the same time, homeowners are able to create equity as their payments accumulate, to provide them with a substantial sum to be put toward the home’s purchase.

Property Transaction Advisory in KenyaFor risk management, the buyer needs to enter into an agreement with the seller before he/she moves into the house. The following are the details contained in a rent to own agreement, as well as other risk management measures and guidelines.

Rent-to-Own Agreement

The rent-to-own agreements include a standard lease agreement and also an option to buy the property at a later time. It’s important to note that there are different types of rent-to-own contract agreements, with some being more flexible than others. That includes the Lease-option contracts (also known as an option-to- buy agreement) and the obligation–to-buy agreement. The option-to-buy agreement gives a buyer the right, but not the obligation, to purchase the home when the lease expires. That simply means that the buyer will forfeit the accrued rent premiums or rent credit and option fee if they opt not to buy the property. During the lease term, the owner is typically not allowed to sell the home to anyone else unless the buyer – who is also the renter, breaks the lease. Nevertheless, the tenant would still need to qualify for the house mortgage and be able to afford the full payment when it’s time to buy the home.

On the other hand, an obligation-to-buy agreement legally binds the buyer to purchase the home once the lease expires. If the buyer is unable or if he/she chooses not to buy the house, they could face legal repercussions, and also they may forfeit any option premiums, rent premiums, or rent credit they had paid.

While entering into a rent to own purchase agreement, potential homebuyers need to treat the process the same as they would if they were outright buying the home.

Seek Professional Help

Buyers should always use professional services of a Lawyer together with a Real Estate Investment Consultant when considering a rent-to-own agreement.  With the help of the consultants, all the terms must be negotiated upfront between the property owner and the renter. That includes; who is responsible for maintenance, monthly rent, the sales price, down payment, improvements, as well as potential rent increases. It’s also vital to review the contract with the Consultants before signing since the legalese can be challenging to decipher on your own, so you know your rights, and you choose the right terms of the agreement.

Research on Particulars of the Contract, Market Valuation, and Costs 

The buyer should also research on the particular of the purchase agreement to make sure that he/she understands it fully, and get the best bargain in relation to prevailing market prices of similar purchase or rental transactions. In this phase, the following should be established with the help of a Lawyer and Real Estate Investment Consultant:

i.) The option fee (rent credit) and rent payments–and how much of each applies toward the purchase price.

ii.) The market valuation of the Purchase price, and how this is determined.

iii.) How to exercise the option to buy (for example, the seller may require you to provide advance notice in writing of your intent to buy)

iv.) The value of maintenance costs, and property taxes.

Conduct Due Diligence on the Property 

The buyer should also conduct due diligence on the property with the help of a Lawyer and Real Estate Investment Consultant, and who should also conduct an independent appraisal of the property. The consultants should also check the seller’s credit report, as well as a property title ownership report to see how long the seller has owned the property. Furthermore, the buyer should also commission a property inspection to make sure the property taxes are up to date and to ensure there are no liens on the property.

Signing the Agreement

Once the buyer is satisfied with the content of the agreement and due diligence exercise, then he /she should sign the rent–to–own agreement and move into the house.

The difference between the traditional home-buying plan and the rent-to-own purchase plan is that rent to own will work in any market, both in the property boom and in the recession. Currently in covid-19 pandemic, an economic crisis is in full swing, and people are losing their jobs, homes, and financial security. When the market bounces back, the divide between those who survived and those who sank will be enormous. But those who have already implemented a rent-to-own strategy in some capacity are realizing cash flow despite the market turbulence.

Buildafrique Consulting Group is a specialist and expert in Property Transaction Advisory in Kenya, as well as Property Management, Development Project Management and Consultancy, conducting Real Estate Feasibility Studies, and Real Estate Finance.

 

B.) WEEKLY NEWS HIGHLIGHTS

 

            MAJOR ECONOMIC NEWS HIGHLIGHT.

 

i.) The shilling falls to a new record low of 108.40 against the dollar

The Kenyan shilling on 22nd July 2020 plummeted to a record low of 108.40 against the dollar. The shilling was pulled down by the scramble for hard currencies from importers resuming business following the easing of the coronavirus lockdowns on 06th July 2020 by President Uhuru Kenyatta. The fall breached the forecast by the CBK on the shilling to hit a low of sh107 against the dollar due to the coronavirus pandemic.

 

 

 

 

ii.) The Treasury will only guarantee part of the SMEs Loan,

The new Amendments to the Public Finance Management Bill, 2020 (which is before the National Assembly) proposes the National Treasury to partially guarantee loans given to small and medium enterprises (SMEs) under the state-backed Credit Guarantee Scheme. The bill was tabled in parliament on 17th July 2020 as the state speeds up efforts to cushion SMEs from the adverse of Covid-19 by providing 3rd party credit risk mitigation for commercial loans with an initial budget of Ksh3 billion. The proposed law also gives the Treasury the power to set out the conditions for the guarantee of the loans and the size of losses that the State will absorb in case of a default.

iii.) International Financial Corporation loans Equity Bank Ksh 5.4 Billion SMEs fund

Equity bank received a $50 million (Ksh 5.4 billion) loan from the International Financial Corporation (IFC), a member of the World Bank Group, to increase lending to Small and Medium Enterprises (SMEs), which are affected by the Covid-19 pandemic. On 22nd July 2020, the Equity Group chief executive James Mwangi said that the IFC’s loan is part of the bank’s business continuity management plan, which will help it to extend the much-needed support to SMEs in sectors hit hard by Covid-19 pandemic.

 

 

iv.) Consumer spending declined in the second quarter of 2020

According to findings by Nielsen’s Consumer Confidence Index (CCI) Survey for the second quarter of 2020, Kenyans have less cash to spend. The survey shows that consumer confidence fell by 11 points to 88 in the second quarter of 2020, with many Kenyans shelving spending intentions, and saving less. Only 20 percent of the interviewed Kenyans said they had spare cash, down from 27% in the first quarter of 2020. Furthermore, the survey findings, which were released on 21st July 2020, showed that the declining disposable income resulted in changes in spending habits, with 85% of Kenyans postponing spending in the second quarter of 2020, compared to 76% in the first quarter of 2020.

 

                CONSTRUCTION INDUSTRY HIGHLIGHTS

 

i.) Construction Work to begin on Sh11bn Samara Estate at Migaa in Kiambu

A Chinese company is set to begin construction of nearly 2,000 low-cost houses at the Samara Estate in Kiambu County. China Building Technology Group Kenya has signed a deal with Sycamore Pine Limited for the construction of 1,920 apartment units in the 774 hectares of the Migaa Golf Course. According to the CEO of China Building Technology Group Kenya Tom Kimani Zeng, the entire project, including a proposed shopping mall, will be complete in three years.

 

 

ii.) United Nations to construct a KSh1.1 billion Hospital in Nairobi

The united nation is planning on building a Ksh 1.1 billion coronavirus treatment facility in Nairobi to offer Covid-19 treatment services to its workers and their family members in Africa. While doing a ground-breaking for the facility at the Old Nursing School on 20th July 2020, the UN Nairobi office Director –General Zainab Hawa Bangura said that the center will be ready in eight weeks. The facility will have an operating theatre, laboratory, radiology and physiology services, and 150 beds, including 25 intensive care and 50 high dependency units.

 

 

iii.) Developers challenge the Defect Liability regulation in the senate

Contractors and developers under the Joint Building and Construction Council (JBCC) have intensified lobbying against the National Construction Authority Defect liability Regulation, 2020 gazetted in April 2020 in the senate. The Joint Building and Construction Council (JBCC) wrote to the chairman for the senate committee on Roads and Transportation, Kimani Wamatangi, on 22nd July 2020, asking for the refinement of the regulation as the regulations are not in conformity with the statutory instrument Act of 2013.

 

iv.) Government piles pressure on affordable housing contractors

Contractors for the Boma Yangu initiative, which is supposed to provide Kenyans with affordable housing, have been warned against delaying the construction of the much-awaited houses. Speaking during an inspection of an affordable housing site in Kiambu County on 22nd July 2020, the Chief Administrative Secretary for Transport, Infrastructure, Housing and Urban Development, Wavinya Ndeti, said that contractors who drag their feet on the construction of the much-awaited houses would be blacklisted.

 

 

              COMMERCIAL REAL ESTATE HIGHLIGHTS

 

i.)  Banks shun auction of seized real estate assets on low bid prices

Commercial banks have shunned auction of properties seized from loan defaulters whose bid value is below the minimum value of 75% against the prevailing market value set in the Land Act 2012. Banks reckon that few takers have offers that match the reserved bid prices, prompting expensive repeat advertisements for property auctions and high storage costs. According to Stanbic Bank Kenya CEO Charles Mudiwa, Lenders are now shifting to private treaties allowing distressed borrowers to agree with banks to look for the best available price for their properties and sell to repay loans.

 

ii.) Real estate sector in Nairobi named haven for Money launderers

A report by The Sentry, an investigative and Policy team that follows the dirty money connected to African war criminals and transnational war profiteers, named Nairobi among top Cities in Africa with stolen wealth in real estate. The report, which was released on 20th July 2020, indicated that African kleptocrats, especially those in war-torn countries, have increasingly favored real estate in African cities, among them Nairobi, as a means for laundering the proceeds of corruption. Furthermore, an evaluation by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), on Kenya, noted the lack of enforcement of 2011 anti-money laundering legislation requiring real estate agents to report suspicious transactions, as a challenge.

 

iii.) Hotels to receive loans at a low interest

Hotels ravaged by the coronavirus crisis will access cheap loans at an interest rate of between five to seven percent under a Sh10 billion State-backed credit scheme. While announcing the scheme on 22nd July 2020, the cabinet secretary for Tourism Mr. Najib Balala said that the scheme would offer affordable credit to hotels and firms operating in the tourism sector, especially small and medium enterprises (SMEs). The loans will run for ten years, lowering the monthly obligations, with borrowers starting to repay the debt after two years.

 

 

 

iv.)  Tuskys supermarket considers closing some of its outlets

On 19th July 2020, the Tuskys supermarket, through its CEO Dan Githua said that it would no longer hold on to non-performing outlets and as such, branch closure was imminent. The supermarket chain is also considering converting the supplier’s debt into equity, which will see the supermarket raise sh500 million in capital. The supermarket also seeks to open a third-party escrow bank account linked to the supermarkets’ tills that will solely handle supplier cash.

 

 

 

 

C.) KENYA REAL ESTATE TRENDS

 

i.) Malls in Kenya loose traction to investors

Some commercial property developers vowed not to develop malls in the near future due to a low occupancy rate and the increasing competition from online retailers. The hype surrounding the boom of malls has fizzled out, leaving developers with burnt fingers as most malls are struggling with low occupancy at the moment. The importance of ‘other’ services which support malls, such as entertainment, food and beverage offerings, and community services (for example gyms and childcare) has reduced tremendously due to the call for social distancing, affecting the rental income for mall owners. Besides, the conversion of property for retail purposes has, in the past two years, suffered a blow for various reasons. The unprecedented competition from online retailers who do not take up stores in malls continues to be a challenge to mall owners who are tasked with employing innovative methods to retain tenants in their establishments and attract clients to their malls.

Centum Investment, for example, said that it would not undertake the development of any commercial rental property in the next five years. The investment company said that it would instead focus on managing the Two Rivers Mall, its two office towers, and the development of affordable residential housing.

 

ii.) Appreciation for properties with Gardens increase amid Covid-19 pandemic

With most people staying at home, having a garden has never been more critical. Amid Covid -19 crisis, which has forced many Kenyans to spend more time indoors, the appreciation for homes with gardens has increased tremendously.

Kenyans are turning to gardening as a soothing, family-friendly hobby that also eases concerns over food security as lockdowns slowed distribution of some crops like tomatoes. Most people are stuck at home with little to do and are turning to their garden for relief. The appreciation of homes with enough space for gardening is likely to go even post covid-19, and as a result, the trend could increase demand and value for a property with a garden in the future.

 

D.) GLOBAL REAL ESTATE TRENDS

 

i.) Chinas office market experiences a downward trajectory despite furnishing efforts

As Commercial Retail Real Estate sector grows in China, the office sector is still in turmoil. The office sector entered the Covid-19 crisis in a reasonably stable condition, with steady vacancy rates and stable rental rates, but most office-based businesses are continuously transitioning their employees to working remotely, leaving landlords cash flows disrupted.

According to the JLL report, the vacancy rate for Grade A office space in China was 14% in the second quarter of 2020, up from 11.3% from the first quarter of 2020. Furthermore, data from the National Bureau of Statistics in China showed that transactional sales of office buildings for the first half of 2020 fell 28%, which was near historic lows. Despite the continued furnishing of office spaces to meet the covid-19 safety measures, few are showing up to them as most tenants are taking a hard look at when and whether to return to their offices.

 

iii.) Mall Owners Open Micro Distribution Hubs for E-Commerce Fulfillment

In an era where e-commerce fulfillment has become a competitive differentiator, mall owners are evolving their operations to work with tech-enabled logistics companies to establish micro-distribution hubs in their retail centers. According to Fillogic, a logistics-as-a-service platform, more than 60% of mall-based retailers in the USA have shipped to store capability, with malls averaging 950 to 3,200 packages shipped daily.

According to Bill Thayer, co-founder and co-CEO of Fillogic, tech-enabled mall-based solutions are designed to aggregate demand and maximize efficiencies for all stakeholders as well as attract tenancy from E-commerce operators (a strategy that Kenya’s mall operators can borrow to attract tenancy). That has also enabled property owners, retailers, and freight delivery networks to operate as an integrated network. Furthermore, Mall-based distribution centers will help retailers to more efficiently distribute merchandise to their online and offline shoppers.

 

E.) COMMON REAL ESTATE & DEVELOPMENT CHALLENGES,  AND SOLUTIONS

 

Definition of a Market Product for a Real Estate Investment Project.

 

YOUR CHALLENGE:

 

The Market Product for a Real Estate Investment Project is established by knowing the expectations of the Market, which are defined by market dynamics or supply and demand.  Your challenges as an investor comes in the definition of the market product expected by the Customer, in relation to size of the Unit for a certain market, product ratio in cases where you are developing a variety of product units, say 3 Bedroom and 2 Bedroom Units, and levels of Finishes.

 

 

 

THE SOLUTIONS:

 

The Market Product for a Real Estate Investment Project is established through Market Research and Feasibility Study, which is conducted to define the specifics of expected Market Product for the Customer and the Market in general. The Product definition comprise of the following:

a) Defining the Size of the Unit: – The market research establishes the size of units in a certain market demographic, in relation to market dynamics of demand and supply. This helps in establishing the optimal unit size design for the project.

b) Product Ratio: – The market research is also expected to define the product ratio, for projects that have various unit property type; say two-bedroom, three bedrooms, and one-bedroom units. This help in establishing the optimum ratio so that there is no oversupply of one versus the other or under-supply in relation to market demand.

c) Amenities: – The market research is also expected to establish the service amenities in the project, in relation to market demand and supply dynamics of the area or market. This means that the investor must consider all the amenities supplied in the market in relation to competitive landscape of the market, as well as consumer taste, preference, and demand.

d) Level of Finishes: – The level of finishes in product definition should also be established through the market research. This should inform on the finishes specification of the market area, in line with supply and demand dynamics, these being internal and external finishes, types of doors, types of windows, types of sanitary and electrical fittings, and external works finishes specification.

 e) Price: – Price of the final product should also be defined through the market research. This include the projected selling price for unit sale products; as well as unit rental prices for rental products. Other cost price related to operations of the final products should also be established, these being: market service charge costs, market lease renewal costs, and market rent review costs.

Once above process has been finalized, the Product Definition Brief is then issued to the Project Design Architect for implementation into a Concept Design.

 

THE CONSULTANT TO ENGAGE:

 

The Consultant to engage in market research and product definition for Commercial Real Estate Product is a Real Estate Research Analysts.

 

 

 

 

 

F.) THIS WEEK ON FREQUENTLY ASKED QUESTIONS (FAQs), AND ANSWERS

 

QUESTION:

What sources of finance have the lowest Interest Rates?

 

 

 

 

 

 

 

 

ANSWER:

 

There various form of project finance in the market, common being:

  1. Equity Finance
  2. Debt Finance
  3. Contractor Debt and Equity Finance
  4. Pre-sale Finance.
  5. Buyer Equity Finance and Partnerships.

The cost finance, or interest rates for Project Finance is usually established by the level of risk involved in the project, and expected returns by the Investor or Lender. Common project risks in this case for evaluation of the cost of finance or interest rates include Investment Risks, Market Risks, and Financial Risks.

Debt Finance offered by Banks in Kenya attracts standard interest rates between 11% and 13% in June, 2020, with various negotiation offers related to the period of repayment and risk profile of the project.

However, most Equity Investor for Equity Finance demands above average interest rate higher than commercial bank interest rates because of the high risk involved, coupled by a considerable high return on capital expected by the Investor.

However, a new bread of equity finance called Buyer Equity Finance that entail the developer selling the product units at a discounted premium to a few buyers who invest in the project as shareholders rather than buyers, attracts considerable low interest rates since the investors are expected to get their returns from capital gain of the property during and after the construction process.

Raising finance through pre-sale also means that the developer does not have to pay any interest on the finance received on sales made through off-plan, or pre-sale of the project or market product before commencement of the construction process, thereby presenting savings in the cost of finance in a project.

Similarly, Contractor debt or Contractor equity finance also attracts negligible or zero interest rates similar to that for  pre-sale, since the contractor financing the project through materials and technical expertise is also expected to receive his/her returns through capital gain of the completed project.

 

G.) THIS WEEK ON DEVELOPMENT COSTS ANALYSIS – KITISURU AREA, NAIROBI COUNTY

This week’s focus on Development Cost Analysis is for Spring Valley, Nairobi County, an upmarket area in the Metropolitan area of Nairobi. The Development type in this area according to the land-use and county zoning regulations includes Maisonettes and Town House, 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.

 

 

H.) THIS WEEK ON REAL ESTATE PRICE ANALYSIS – SPRING VALLEY, NAIROBI COUNTY.

The Real Estate price analysis focus for this week is on land, sale, and rental prices for a 4 and 5 bedroom house in Spring Valley – Nairobi County. The data were obtained through surveys, and analysis of asking prices on property listings in Nairobi.

 

i.) Sales price – Houses.

 

ii.) Rent price – Houses.

 

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

 

 

I.) CENTRAL BANK OF KENYA INTEREST RATE WATCH – (T-BILLS)

The money market remained liquid over the week ending 23rd July 2020, supported by government payments, which offset tax receipts.  Commercial banks excess reserve stood at Ksh 28.2 billion in relation to 4.25 percent statutory cash reserves requirement (CRR).

91 day T-bill increased by 0.101from 6.011% previous week rate to 6.112%. CBK offered a total of Kshs4 billion, and bids amounted to Kshs10.816 billion, of which 10.448 was accepted. Volume on bids received increased week on week basis. 182 day T-bill declined by 0.084% from 6.524% previous week rate to 6.440%. CBK offered a total of Kshs10 billion, and bids amounted to Kshs1.388 billion, of which 872 million was accepted.  The 364 day T-bill declined by 0.094% from 7.464% previous week rate to 7.370%. CBK offered a total of Kshs10 billion, and bids amounted to Kshs23.689 billion, of which 23.238 was accepted.

 

J.) KENYA EQUITY MARKET INDICES

The equity market remained relatively stable during the week ending 23rd July 2020 due to increased consumer spending in the economy, which was attributed to local travel bans being lifted on 6th July 2020 by President Uhuru Kenyatta.

The NSE 25 share index and the NSE 20 share index declined slightly by 1.34% and 1.11%, respectively. On the other hand, the NASI share index, the Market capitalization, the I-REIT turnover, and I-REIT deals increased by 0.34%, 0.35%, 32.24%, 35.71%, respectively. The number of shares traded and equity turnover declined by 52.4% and 51.6%, respectively.

 

K.) KENYA CAPITAL MARKET ANALYSIS

The volatility of the capital market remained relatively low during the week ending 24th July 2020. Activity in the banking and telecommunication sector remained relatively high throughout the week with Safaricom (7,197,400 shares), ABSA Group Holdings (2,638,000 Shares), KCB bank (2,478,600), and Equity Bank (2,077,300) being the top gainers during the week.

The week’s top gainers were Berkeley Group Holdings (BKG), Nairobi Business Ventures (NBV), Eveready East Africa (EVRD), Uchumi Supermarket (KEGN), and Flame Tree Group Holdings (FTGH), which had their shares increase by 7.78%, 3.45%, 2.97%, 2.86%, and 2.76%, respectively. On the other hand, the week’s top losers were Longhorn Publishers (LKL), Standard Group Limited (SGL), I&M Bank, Sameer Africa, and Stanlib Fahari Income- REIT ) with their stocks losing by 6.33%, 4.17%, 3.90%, 3.90%, and 3.10%, respectively.

 

L.) CURRENCY HIGHLIGHTS

The Kenyan shilling was under pressure in the week ending 23rd July 2020 due to market players from broad sectors of the economy shoring up their dollar reserves after the shilling weakened to a record low.  The Kenyan central bank sold dollars during the week to support the shilling against increased dollar demand from the energy sector and merchandise importers as business activity resumed following the lifting of local movement restrictions.

The shilling exchanged at 108.12 against the US dollar, which was a record low. The Kenyan shilling though remained relatively stable against the local currency exchanging at a mean of 21.50 and 34.20 against the Tanzanian and the Ugandan shilling, respectively.

The country’s forex reserves remained adequate at 9,421 million (5.87 months of import cover) as of 23rd July 2020. That meets the CBK statutory requirement to maintain at least four months of import cover and the region’s convergence criteria of 4.5 months of import cover.

 

M.) FACTORS THAT WILL SHAPE THE REAL ESTATE AND OTHER MARKETS IN THE NEXT ONE WEEK.

 

i.) Ban of selling of alcoholic drinks in Restaurants

The Ministry of Health drafted a new regulation barring the sale and consumption of alcoholic drinks in restaurants, eateries, parking lots, entertainment joints, supermarkets or wines and spirits shops to tame the spread of coronavirus. The regulation which is awaiting a notice number from the office of the Attorney General also plans to limit the operating hours for businesses establishment that sells alcohol to be between 9 am and 7:30 pm

According to operators in Bars and restaurants, the new plan to ban drinking alcohol inside their premises will result in Sh50 billion loss in revenues. The plan will hit the hospitality sector hard, given that the sector had lost almost Sh15 billion by the end of June 2020 when most restaurants were not in operation. The move will also see restaurants and bars enter into big losses given that their reopening costed them between KSh200,0000 to Sh500,000, with some of them spending upto KSh 1 million.  According to the Pubs, Entertainment and Restaurant Association of Kenya (Parek) national chairperson Alice Opee, about 500,000 jobs will be lost, leading to a further decrease in the nation’s gross domestic product. Without jobs, wage earners will not have the financial ability to make rent or pay mortgage. The move will also see sales in the tor drop by a substantial margin, given that restaurants and bars are currently operating at 40 percent capacity. That will lead to a disruption of their cash flow, and in the short term, it might lead to the closure of restaurants, eateries, and entertainment joints. Lease breaks will also be imminent following the ban due to lost businesses.

ii.) Depreciation of the shilling

Over the week ending 24th July 2020, the Kenyan shilling has been depreciating, hitting a record low of 108.20. The shilling was dragged down by the increasing demand for hard currencies from importers getting back into business after the state started to ease coronavirus lockdown measures on 06th July 2020.

The continued depreciation of the shilling is likely to further push up the cost of living for households as importers pass the hiked bill to consumers. The cost of imported industrial raw materials and construction materials and equipment is also likely to go up. It is also expected to see the country pay more for dollar-denominated loans, which rose to Sh3.49 trillion in May from Sh3.31 trillion in April, pushing up Kenya’s total public debt to Sh6.5 trillion.

 

N.) UPCOMING REAL ESTATE EVENTS AND TRADE SHOWS IN THE COMING ONE WEEK.

 

i.) Webinar: Virtual and Augmented Reality in Real Estate –  The webinar will explore real estate Virtual Reality experiences as well as explore a collection of augmented reality tools for clients and agents to utilize as part home buying process.

Date: August 03rd 2020

Time: 0100 PM EAT

Venue/Media: Online

Event Organizer: https://www.crs.com/CatalogSearch/CatalogCourseDetail?CourseID=1615

 

ii.) Webinar: Navigating the spectrum of technology solutions for Re- Occupancy – The webinar will explore technologies that may play a role in the re-occupation of office and retail spaces.

Date: 06th August 2020

Time: 7:00PM

Venue/Media: Online.

Event Organizer: https://www.realcomm.com/webinars/772/healthy-and-safe-re-occupancynavigating-the-spectrum-of-technology-solutions

 

 

 

 

 

 

 

 

 

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. Project Management.
  4. Investment Design Appraisal.
  5. Quantity Surveying
  6. Construction Cost Consultancy
  7. Physical Planning and Planning Permissions
  8. Environmental Management and Impact Assessment
  9. Real Estate Development and Structured Investment Solutions
  10. Property Valuation
  11. Marketing and Property Sales Agency
  12. Property Management and Facility Management

Our Contacts:

 

Disclaimer:

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.

 

 

 

 

 

 

 

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