QUESTION:
Where do I Start for a Real Estate Investment Project that require Project Finance, Real Estate Finance, or Capital funding from a Finance Investors in Kenya?
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ANSWER:
The Investment appetite in Kenya has brought a need for most Kenyans to add value into their land properties through Real Estate Development, ranging from residential, commercial, and industrial developments. However, research has shown than there is no clear information in the market and to many investors on where to start or what to start with while undertaking a venture in real estate development projects. In particular, a lot of investor do not know where to start from while seeking to raise funding from real estate finance investors or bank. Below is an outline step by step process on how to package a real estate business plan for investors while seeking capital funding, and information on where to start as an investor.
- Real Estate Feasibility Study: – A real estate feasibility study is a market research exercise that is undertaken by a Real Estate Research Analyst to establish the Viability a certain real estate investment option, or to determine feasible investment options on land property. The Feasibility study also demonstrate to the investor and financier the various investment risks on the proposed venture on how they can be mitigated. Another important result from a feasibility study is that it defines the real estate product to be design in the property or to be invested on the property, including design specifications like floor areas, unit size, and amenities. The real estate investor should therefore start by conducting a feasibility study, so as to establish viability or feasible investment option, as well as advise the Design Architect on the investment product to design.
- Concept Design: – Following definition of the product in the feasibility study, meeting the Design Architect becomes the next step. However, it is recommended to have the Feasibility Study Research Analyst work together with the Design Architect during the feasibility study exercise, to allow the Research Analyst to incorporate any research input that would be required by the Architect in his or her design. At this point, the Design Architect utilize the information generated by the Feasibility Study, mainly the Product Definition, to come up with the concept design for the investment project as well as outline design that include all the measurements and floor layouts.
- Project Cost Plan: – Project Cost Plan is an important component in a real estate business plan to be presented to the investor as it shows the budget requirement for the project. This would be generated by a Quantity Surveyor who works from the Design Concepts generated by the Design Architect in the previous stage. The Project Cost Plan would also help the Financial Analyst to draw Financial projections and Investment Models for the project in the next stage.
- Financial Analysis, Investment Model, and Real Estate Business Plan: – The Real Estate Financial Analyst would come in at this stage for Financial Analysis of the investment venture for the proposed project, which include investment models, cash flow models, capital structures, and investment design analysis models. This is to help establish and determine the financial viability of the investment for the investor and the financier. Equity financed project would also require structuring of Joint Venture investment models, which are prepared by a Real Estate Joint Venture Finance Specialist.
Above information is complied in one document called a Real Estate Business Plan, which include an Executive Summary, Market Research Feasibility Study, Concept Design, Project Cost Plan, and Financial Models. The Real Estate Business Plan can also include Project Management Methodology from a Project Manager, Operational Methodology for the Investment, Marketing Strategy, and Risk Analysis.
- Sending of the Business Plan Investment Teaser to Investors.
The Final Stage would be for the Investor to send the Business Plan or Investment Teaser to prospective Investors or Banks for investment or financing interests.
It is recommended to have a PROJECT MANAGER in the project to coordinate all of above activities for the Client or Investor. The Project Manager should be a consultant with majority of expertise in above consultancy field. Buildafrique Group is a specialist in Real Estate Development Consultancy, advisory on Investment in Real Estate, Real Estate Feasibility Studies, Real Estate Finance, Development Project Management, and Quantity Surveying.
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Writer of the Article:
This Article 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:
- Feasibility Studies and Market Research.
- Project Finance and Capital Raising.
- Joint Venture & Finance Structuring.
- Project Management.
- Investment Design Appraisal.
- Quantity Surveying
- Construction Cost Consultancy
- Physical Planning and Planning Permissions
- Environmental Management and Impact Assessment
- Real Estate Development and Structured Investment Solutions
- Property Valuation
- Marketing and Property Sales Agency
- Property Management and Facility Management
Our Report:
- Office: Navigators, Kindaruma Road, Nairobi.
- Website: buildafrique.com
- Email: [email protected]
- Tel: +254 20 8058493 / Mobile: +254 722 474285