The Developers Digest Q1 Issue

12
Have Your Say
Real Estate is Not A Gamble!!
By Purity Kagendo Makau
Business Development & Marketing Manager, Daykio Plantations Ltd
In the recent times, we have witnessed many
investors both locally and in the diaspora
developing an appetite for investing in the real
estate. The perception is that there is quick money
and high return on investment in the real estate
compared to other investment avenues. The interest
is also driven by the 500,000 housing units deficit in
Kenya annually where we have seen the Government
trying to do its best to bridge the gap through
affordable housing and involvement by private
developers.
However, lucrative as the industry may appear,
we have seen giants, medium, Corporates and
individuals in the real estate plunge into losses due
to negligence and the reasons as hereunder: -
1 Lack of due diligence on the property
A serious investor should be able to conduct
due diligence on the property using the right
and ethical legal practitioners who will conduct
search on property ownership. This process
should guide the investor on whether the
property is under any encumbrances or in
succession process.
2 Poor planning
Some of the mistakes investors make is buying
a property without having in mind a clear plan
on what they really want to do with it. Some
either buy just because they have the money
or the property is available without having the
consideration like;
• why am I buying this property?
• Is it to develop serviced apartments to Let or
residential units for sale?
• Who am I buying for and what are the needs
of this customer?
When all these questions are answered one
should therefore be able to structure the
concept plan based on the customer needs and
preferences.
3 Delivery on promises
What promises do we make to our customers
when wooing them to buy our projects? We
have witnessed many Kenyans locally and in the
diaspora lose money through off plan & Master
planned concepts just because they were sold
dreams that were not realised. Consequently,
taking the developer to endless legal battles with
the investors and leading to indefinite closure of
such developments. My caution to investors is to
make realistic promises and Do not overpromise.
4 Title Deed processing
The Title Deed is a legal document of property
ownership and a very critical document for any
Real estate investor. We have two types of Title
Deeds where one is leasehold and the other free
hold. A free hold Title Deed is not limited to
tenure, while leasehold is limited to expiry period
of 99 years. My advise to investors is to be clear
of the Title Deed tenure in order to mitigate the
chances of buying a property whose tenure is
almost expiring.
5 Pricing of the properties
Pricing of the property is dependent on the Cost
of the property, Location, value addition, target
customers and the desired project lifespan. We
have observed a situation where some of the
developers price their properties with neither
of the above factors hence making the property
expensive for the buyers to afford, rendering the
project inactive and consequently the loss of
desired revenue
6 Collaboration with the Real Estate partners.
Collaboration with the real estate partners like
Adopting a Long-term Perspective in the Real Estate Sector