Joint Venture financing for construction at Rhapta Road, Westlands, Nairobi.

Rhapta road is located within the upmarket Westlands neighbourhood of Nairobi.

Buildings around Rhapta road are elegantly designed, with a mix of all international styles.

The typology of the surrounding buildings is high end offices and residential apartments, high rise.

Profit sharing for Joint Venture. 1.6 acre land.

Land Value.

1 acre sells at approximately kes 300million per acre in this area.

Built up area sale value.

This apartment of 200m2 is being sold along Rhapta road for kes 25,000,000. Cost per m2 for sale is kes 125,000 per m2.

40% to land owner and 60% to financier/developer.

In this scenario, total project cost including land value is kes 3.2 billion. Total project sales are kes 4.6 billion. This means profit is 1.3 billion.

At this profit sharing ratio, the land owner gets the value of the land at kes 390 million back and the developer gets the cost of construction, architectural, quantity surveying, engineering consultancy fees and bank interest rate financing back. There is no profit for both developer and land owner since the project only covers the cost of input.
The land owner takes home kes 700 million, which is the value of the land, plus half the profit, taking home kes 2billion.

30% profit to land owner and 70% profit to financier/developer.

In this scenario, we have 10 floor levels at a ground coverage of 50%.

The total cost of the project, inclusive of land value is kes 2 billion.
The total sale value is kes 1.6 billion.
At a 24% Return on Investment towards the whole project, the land owner can take home approximately kes 600 million.

50% profit gain.

This represents a 50% increase in profits , which is a good investment for the land owner. This value is set to appreciate over time as capital gain from increased property sale value.

15,600 m2 of built up area is expected to be constructed using this model.

Architect Francis Gichuhi Kamau.

Arch. Francis Gichuhi Kamau. (337 Posts)

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


Leave a Reply

Your email address will not be published. Required fields are marked *