How to Develop Residential Property for Sale.

How to Develop Residential Property for Sale.

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Property development is a very profitable business. With the onset of the sectional property title legislation, this has propelled development of residential units for sale to an even higher level.

The target clientele is a very crucial factor in property development. There is low cost, middle cost and high cost housing.

Low cost.

low-cost 3 bedroomed house for sale
low-cost 3 bedroomed house for sale

These are houses that are located a bit far from the main road and towns. Here an 8th costs around KES 300,000. The quality of construction is low so the cost of construction per square meter is KES 17,000. The 3 bed roomed house here is smaller-90 square meters. This brings the total cost of construction to 90 x 17,000=KES1, 530,000. The total cost of investment is KES 1,530,000 + KES 300,000=KES 1,830,000.
The house is sold for KES 3,000,000. The profit margin is KES 3,000,000 – KES 1,830,000=KES 1,170,000.

Middle cost.

middle -cost residential house for sale
middle -cost residential house for sale

These are houses that sell for an average of KES 5,000,000. Such projects are mainly located in areas that are in close proximity to major towns and roads.
They are built within a 50 feet by 100 feet plot-1/8th of an acre.
A good 8th of an acre close to the road costs roughly KES 1,200,000 along Mombassa road in Syokimau area.

Construction of a 3 bedroom house of approximately 100 meters squared at KES 25,000 per meter squared will cost KES 2,500,000. The total investment will come to KES 3,500,000.
The profit margin is KES 5,000,000 – KES 3,500,000= KES 1,500,000.

High cost.

Kihingo Village-Kitusuru-Houses for Sale
Kihingo Village-Kitusuru-Houses for Sale

These are houses that are located inside major well-planned towns such as Hurlingham, Lavington, and Runda. A characteristic of such a region is strict low density zoning and development control by the local authority e.g. Runda Estate.
Here, the house is designed bigger in size-usually in the range of 200 meter squared floor area. The construction cost is much higher-around KES 35,000 per square meter due to the strict quality control on labour, materials and workmanship.
The total estimated cost of construction for such a unit is ES 35,000 x 200 m2= KES 7,000,000.
In such areas, the minimum size of a plot is kept at a quarter acre to ensure that the area remains prestigious. A quarter of an acre at Kugeria Estate after Ridgeways near Kiambu town goes for roughly KES 6,000,000.

The total cost of investment for such a house will be KES 7,000,000[cost of construction] + KES 6,000,000[cost of land] = KES KES 13,000,000.
Such houses are sold for KES 20,000,000 and above.

In areas where land is not easily available such as Kileleshwa and Hurlingham, these units are developed as high-rise flats and the houses sold using sectional properties act.

Conclusion.

Property development is becoming a very competitive business. To keep ahead of competition, unique architectural design is recommended. A quick look at available houses for sale in Ongata Rongai will reveal that all houses are of the same monotonous design. A property developer who comes up with a unique design will easily get buyers in such an area.

Frank Gichuhi.
Architect.
www.a4archtect.com

Francis Gichuhi (692 Posts)

Architect Francis Gichuhi . B.Arch. University of Nairobi. Registered Architect, Kenya. Member, Architectural Association of Kenya. Contacts. email info@a4architect.com. Telephone +254721410684


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  2 comments for “How to Develop Residential Property for Sale.

  1. John M
    January 17, 2010 at 2:02 pm

    Very informative. Nice.

  2. bianca
    March 11, 2011 at 8:26 pm

    good morning

    We heard about you through the newspaper and hence had a look at your website.
    We are interested in developing 5 houses similar to the kihingo village community.
    From your website we can see a study you have given under high cost houses but cant fully understand how much roughly it would cost to make each unit. If you could kindly advise cost of each unit as a guide.
    Also the where abouts of your offices would be grateful and when your open.

    Warm Regards

    Bianca
    Esem Group

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