New Real Estate investment opportunities are coming up in Kenya, inspired by opportunities available in developed nations such as USA and South Africa.
Investments whereby several people come together to pool resources such that they can be able to afford the best land location have been developed.
A4architect.com has come up with such an investment along the Southern Bypass, Nairobi, near Thogoto/Kikuyu town for the development of a boutique hotel whereby the hotel rooms will be sold off to investors.
Currently, the hotel rooms are 20% sold out.
Using the valuation method whereby a 15 year period is selected to be the benchmark for return on investment, with a monthly earning of kes 1,400 per night x 30 nights x 80% occupancy rate,=kes 33,600 per month.
A further 20% is deducted for the day to day running cost=kes 26,880.
KES 26,880 is the amount an investor is expected to earn per month . This amount is expected to rise in future as the room occupancy increases from the estimated 80% to nearly 100%.
Using the kes 26,880 per month, for 15 years, the amount will be 15 years x kes 26,880 per month x 12 months =kes 4,838,400.
This kes 4.8m is the fair value of the hotel room.
Current sale price.
The current sale price is less than half of the actual value.
Check the sale price here
This means investors will buy at less than half the actual value and therefore can later on resell at the actual value or cash in on the monthly income.
Comparison with other investment options.
Other investment options that have the capacity to bring in kes 27,000 monthly cost around kes 5m to kes 6m e.g. the apartment blocks along Mombasa road, Syokimau area.
From the above examples, its clear that for an investor to earn kes 27,000 per month from real estate in Kenya, they need to fork out approximately between kes 5 to kes 6m.
In the a4architect.com hotel investment, the investors can earn kes 27,000 monthly with an initial investment of less than half as shown below
The a4architect.com hotel investment can be easily re-payed in full if someone opts to take a bank loan.
Using the Coop Bank mortgage calculator below, for a kes 2m loan for 15 years, the repayment per month is kes 27,000.
This means that investors with easy access to bank loans can take out a kes 2m bank loan and sit comfortably as the hotel room repays itself fully for the next 15 years. In Kenya, its next to impossible to find such real estate investments whereby bank loans can easily offset 100% the investment.
For example, investments that earn kes 27,000 monthly, costing kes 5m , will need an investor to pay the bank kes 70,000 per month for the next 15 years and yet the investment can only bring in kes 27,000, hence the investor sourcing the balance of kes 70,000-kes 27,000=kes 43,000 from other sources or businesses, which is not prudent.
With the a4architect.com Southern Sunshine hotel investment, for the same monthly income of kes 27,000, an investor will sit back and watch the bank repay his investment form their smart decision.
See the Southern Sunshine Hotel title deed copy, company registration certificate and other details here
Contact the below undersigned for more details.
Francis Gichuhi Kamau, Architect.