How to ensure your property appeals to potential buyers

A growing number of real estate projects remain vacant because they have failed to impress the market. PHOTO | FILE 

By Annie Njanja

In Summary

• A number of real estate projects, worth millions of shillings, remain unsold and unoccupied despite the fact that Nairobi suffers a housing deficit.

As the real estate market continues to lure investors into the industry, one developer, perhaps eager to enjoy the gains of the emerging property bubble, hurriedly set up a block of apartments somewhere near the Jamhuri Showground exit, along Ngong Road.

The two-bedroom units were ready for occupation by the end of 2013, and a billboard was erected next them advertising that the houses were up for sale at Sh8.5 million.

The developer must have expected to sell the apartments fast, because of the proximity to the main road - the building is less than 20 metres from Ngong Road and is a five-minute drive to the Junction Mall.  Yet, two years down the line, and as per our independent verification, not one unit has been sold, even after the price was reduced to Sh7.5 million.

Opted to rent

Meanwhile, in what looks like a desperate move to start making some money from the investment, the proprietor has opted to rent out the houses, ostensibly as he waits for buyers. Recent confirmation showed that only one unit has been rented out.

But, what has occasioned the sluggishness in the sale of the property? Also, why is it that tenants are not queuing to rent the houses, which are going at Sh40,000 per month, when there are apartments in Nairobi charging a monthly rent of Sh300,000 and which are perennially occupied? Is it that the developer overlooked some important aspects when making the investment? 

The above case is one among a growing number of real estate projects that have failed to impress the market. The projects, worth millions of shillings, are remaining unsold and unoccupied despite the fact that Nairobi suffers a housing deficit.

According to a report published last year by Kenya Property Developers Association (KPDA) and Hass Consult, a real estate firm, Nairobi requires 200,000 new housing units per year in order to keep up with the growing demand.

In 2013, only 15,000 units were released into the market, a telling factor that demand for decent housing far outweighs supply.
But how can developers ensure that their projects appeal to buyers? The trick is getting everything right at the inception stage.

“Before starting a project, it is important for a developer to seek professional advice,” says Johnson Mukuha, Managing Director Markem Management Limited.

“Consult widely and employ a project manager who understands the concept of your project, the target customers and the market,” he says.

Getting the right person for the job, he says, will ensure that the right investment is made.

“For instance, the project manager will tell you if the location you are targeting is best suited for apartments or maisonettes, or a completely different type of housing,” advises Mukuha.

“The project manager should also help the developer design for the target market, especially after arriving at the type of development to be set up, based on the location of the land and how much the investor is looking at making.”

“Buyers are now more informed and have become choosy. They are no longer making purchases blindly; they are keen on details like the location and finishing,” adds George Muhandi, an architect and the project manager of Imperial concepts, a construction firm.

“With multiple apartments coming up all over the city and its environs,” Muhandi says, “buyers are now taking time to study the real estate markets, and are settling on projects that are competitive.”

“We had a project in Kileleshwa, Githunguri Road and we were selling it for Sh110,000 per square metre. But after it failed to get the attention of the buyers, we were forced to lower the price by Sh30,000 and the property sold out in a month,” he says.

Ripe market

Mukuha and Muhandi both agree that the property market is ripe. But buyers no longer want developers to sell them ‘two-bedroom apartments’; instead they want specifications about the space and other amenities that accompany the property.

“A buyer with a small family or no family is more likely to go for a two-bedroom apartment that has a servants’ quarters than a three bedroom house without,” says Muhandi.

Developers need to be aware of these changing trends to keep up with the growing consumer needs which are at the same time changing quite rapidly. The location of the property and security are the other major factors that inform a buyer’s decision to purchase a property. 

“A buyer investing millions in a home will most likely settle for a place that is serene enough to raise kids and spend quality time in,” says Mukuha. 

“Developers also need to know that they need to get the price right because it does not look good for them when they eventually have to lower it in order to get buyers.”

The experts further advise that marketing is an important factor when it comes to getting buyers for new property. They recommend that developers consider listing their property in online portals and tapping into social media in order to create a buzz around their offerings.

But the most important thing to keep in mind is the fact that buyers are today more discerning and will make sure that they are getting value for their money because they have a wide choice today.

ANjanja@kenationmedia.com