CONSTRUCTION OF RENTAL UNITS ON A 40 FT BY 60 FT PLOT

5LEVELS- 2 UNITS PER FLOOR
Cost Item

Kshs

%

Land

1,500,000.00

7.915567282

Preliminary

200,000.00

1.055408971

Construction

15,000,000.00

79.15567282

External Works

450,000.00

2.374670185

Contingency

300,000.00

1.583113456

Professional fees

1,200,000.00

6.332453826

Project Management fees

300,000.00

1.583113456

Financial Charges[16 % of construction cost]

0.00

0

Total

18,950,000.00

100

Financing Plan

Kshs

%

Developer[Land,,Professional & Project Management fees]

3,000,000.00

15.83113456

Debt Finance

15,950,000.00

84.16886544

Total

18,950,000.00

100

PROFESSIONAL FEES BREAKDOWN
ARCHITECTURAL-6% OF TOTAL COST

INCEPTION-0%

0%

0

OUTLINE PROPOSALS-1%

1%

150000

SCHEME DESIGN-1.5%

1%

150000

DETAILED DESIGN-2%

2%

300000

SUPERVISION-1.5%

1.50%

225000

       825,000.00
ALL CONSULTANTS-10% OF TOTAL COST

INCEPTION-0%

0%

0

OUTLINE PROPOSALS-1%

1%

150000

SCHEME DESIGN-3%

3%

450000

DETAILED DESIGN-3%

3%

450000

SUPERVISION-3%

3.00%

450000

   1,500,000.00
RETURN ON INVESTMENT[excluding cost of land]
RENT-KES 15,000 per month for 10 units

150000

Annual rent        1,800,000.00
Construction cost

15,950,000.00

Number of months to repay

106.3333333

Number of years to repay

8.861111111

REMARKS
With an annual rent increment of 10%, the building will ROI within less thn 8 years hence a viable investment.
With the same repayment period of 8 years for both Ground floor only construction and Ground floor + 4 levels,
and potential for building to attract constant regular tenancy, construction of the complete G+4 levels is also
a viable option.

 

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 “CONSTRUCTION OF RENTAL UNITS ON A 40 FT BY 60 FT PLOT

  1. October 20, 2011 at 10:36 am

    Except the small problem of cost of capital. Assume – 15% P.A for 8 years then you are looking at a total cost of Kes 27,478,004.13 (15,950,000.00 + 11,528,004.13 interest).
    And ofcourse the other small matter of taxes.

    • October 20, 2011 at 10:43 am

      @ Joey..true.. the cost of borrowing is way too high in Kenya. Countries like Canada have a 2% interest rate average for the same money. Kenya/African Central Bankers will need to perform magic to reduce this to something affordable.

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