Kenya has an annual housing demand
of 250,000 units with an estimated supply of 50,000 units. This leads to a huge
deficit in housing. This deficit and the growth of the middle class have led
to increased demand for quality real estate.
Nairobi takes a huge
chunk of this deficit. This presents an opportunity to make good returns on
real estate.
Most landowners do not have access to capital to
develop their vacant land. But, we have developers with capital, but not enough
to buy land and build on it. This is because the prices of land available for
sale in Nairobi have sky-rocked in the last few years. It is becoming difficult
for both land owners and property developers to develop Real Estate Projects.
This is where joint ventures come into play. A
joint venture is a business arrangement under which two or more parties come
together to undertake a project. This leads to the parties pooling their
resources together.
We recently wrote about how real estate agents'
commissions can be determined.
Real Estate Joint Ventures: How to
determine the real estate agent commission.
Today I share some of the locations which are “hot
spots in Nairobi†when it comes to Joint Ventures. While the spots are all good
for investment, the attractiveness varies. Some factors relied on include
factors like location, size and terms offered.
Before we dive in, remember
to read about the importance of letters of Authorization
to source real estate. We also provided Letters of Authorization
to sell Real Estate. This helps to ensure the real estate agent and their
partner work with set agreements to avoid conflicts.
In Nairobi suburbs, most
joint ventures have taken the form of gated communities with stand-alone units.
In the list of joint venture hotspots below, flats are preferred. This because
flats use less surface area of land is during construction. This allows for
several housing units can be constructed within a small land size.
Now,
let's dive into the 10 most profitable joint venture locations in Nairobi.
1. Parklands.
The name parklands arise
from the proximity of the area to City Park, Nairobi. During Kenya's colonial
days, the British demarcated the area as a residential neighborhood for civil
servants. During the 1940s and 1950s Parklands was one of the most congested
suburban areas of the Nairobi metropolitan area.
Currently, Parklands has
become synonymous with the Asian community. Parklands’ proximity to
Muthaiga Mini Market, Westgate, Sarit Centre, Diamond Plaza, and the Village
Market add to its affluence. Most joint ventures in this area have been mixed
commercial/residential buildings.
Rent ranges from Ksh 30,000
for a one-bedroom apartment and Ksh 150,000 for a 3-bedroom apartment. For
property for sale, a one-bedroom apartment can go on sale from Ksh 8M with a
3-bedroom fetching upwards of Ksh 20m.
2. Kilimani
Kilimani is home to
Nairobi’s newest buildings and beautiful skyscrapers. The estate is located
approximately 4 kilometers, away from the Central Business District. In
the past, this estate was dotted with multiple single dwellings. The old houses
and bungalows are coming down to give way to apartments and tall buildings.
Kilimani has become more populated thanks to the rise in commercial property,
retail space and residential houses.
Rent ranges from Ksh 50,000
for a one-bedroom apartment and Ksh 150,000 for a 3-bedroom apartment. For
property for sale, a one-bedroom apartment can go on sale from Ksh 8M with a
3-bedroom fetching upwards of Ksh 20m.
3. Pangani
Pangani is a leafy,
upper-middle-class neighborhood in Nairobi. It is made up of mainly
single-family homes, with some high-rise apartments and townhouses. In
Ngara, the government is trying to put up several affordable housing units.
Due to its proximity to
Nairobi CBD and ease of transport Pangani developments will always be in
demand.
4. Westlands
Westlands was majorly a
residential neighborhood during the colonial period for the then well-to-do
society. In the early 2000s, land for residential and office space purposes in
Nairobi’s CBD became exorbitantly priced. Most companies with their
headquarters in the CBD started moving.
Westlands became one of the
better options for businesses owing to its urban feel, cheaper land rates and
proximity to the CBD. Soon after, the real estate in Westlands grew, attracting
not only businesses but the residential market as well.
Westlands enjoys proximity
to major international organizations like the United Nations and the African
Union. Demand for housing and land will always be there in this neighborhood.
5. Lavington.
Lavington is one of the
major suburbs with high-end residential mansions. The neighborhood radiates
peace, calmness, and tranquility. With the presence of different schools, a
variety of restaurants and fun activities to do with family and friends,
Lavington is bursting with so much personality.
6. Kileleshwa
Kileleshwa suburb has its
name fleshed from Leleshwa, a Maasai word for a tree dominant in Naivasha.
Located approximately 5
kilometers from the Nairobi CBD, Kileleshwa is one of the lushest estates in
Nairobi County. Most housing units are flats, maisonettes, and gated
communities.
7. Upper
hill
Construction has seen a
major upswing in this area in recent years, dotting the neighborhood with
skyscrapers. In 2017, for instance, work started on the tallest building in
Africa. Upper Hill is a busy neighborhood with restaurants filled with office
workers and bars with people winding down after a long day at work.
8. South
B and South C
South C lies next to Wilson
Airport and is bordered by South B to the East, Langata Estate to the west and
the Nairobi National Park to the south. Here, houses here are in high demand
due to the estate's closeness to the Nairobi CB. Rentals in South C are quite
pricey vs other Nairobi estates along Mombasa Road.
South C has all kinds of
residential units such as single rooms, bedsitters, one-bedroom, and
two-bedroom apartments that are for rent and sale, maisonettes and gated
communities. Most housing units are maisonettes and gated communities.
South C is inhabited
majorly by Somalis, although other Kenyan ethnic tribes can also be found
within the estate. It houses people from all walks of life too e.g.
Business leaders, expatriates, students, etc.
9. Eastleigh
Nairobi's Eastleigh
neighborhood hosts one of the largest ethnic Somali communities outside
Somalia. The largest population is Kenyan Somalis as well as Somali nationals.
Other communities flock to this area for business. Whether during the day or at
night, Eastleigh has always been a burst of activity.
Eastleigh has become an
important center of Somali diaspora life and a hub for a trust-based trading
community that operates across East Africa and into Asia and the Middle East.
Demand for commercial real estate is at an all-time high with importers
particularly in textiles setting up shop here.
10. Ngong
Road
Ngong road neighborhood is one of the most sought-after neighborhoods in
Nairobi. Ngong road is
especially known for its malls, commercial buildings, business and car
dealerships. Commercial rentals earn more than residential rentals.
Ngong road has always been
one of the richest neighborhoods in Kenya. The recent road expansions have just
enhanced the appeal.
Conclusion:
The benefits of forming a real estate joint venture in
Kenya include several advantages
for the business partners. These benefits could include the ability to scale
the venture rapidly; the ability to combine the skills and resources of the
partners; the potential for economies of scale; the potential for leverage; and
the ability to take advantage of economies of scope.
There are different types of properties to choose
from when venturing into
real estate joint ventures. There are houses, apartments,
commercial buildings, and even teaming
up to sell vacant land. Each type of property has its advantages and
disadvantages. So before investing, make sure you know what kind of property
you want to invest in.
These above neighborhoods are generally in high demand
and you have a good chance to close a deal when you target them. However, do not ignore other areas for joint
venture opportunities in Nairobi. Our advice
is to give these areas 80% of your energy to improve the chances of success.
.jpg)
.jpg)
.jpg)
