THE EAST AFRICAN STANDARD
THURSDAY, AUGUST 16 2007
REAL ESTATE
GETTING THE RIGHT PROPERTY IN THE PERFECT PLACE
TOURISM SPURS NEW PROPETY
Even as global hotels chains prowl the Kenyan market, older buildings are undergoing rehabilitation, writes KENNETH KWAMA
Those who know it often refer it as the “house”. The new development, a hotel, sits in a space, formerly occupied by a two-storey flat in Nairobi West. The property called mvuli house, opened for business early this month.
But the significance has not been lost to property industry insiders who now view hotels as the next frontier of development in the country’s property market.
“The number of tourists coming to visit in the first few years has been increasing, with no corresponding increase in bed space because people have not been investing in that area,”says Mr. Anthony Mwaniki, CEO of an investing group called Alliance Capital Partners.
“Realization that tourism will continue to grow has made investors to start looking in that direction. That is why a hotel like Mvuli House was established,” says Mwaniki.
Curiously,though,investments in hotels is being driven not only by tourists looking for holiday homes for their one use , but also investors ruled by rock-bottom prices and the hope of rapid returns.
Global hotel chains like the Kempinski Hotels Worldwide and Accommodation Hotels are the latest to express interest to establish properties in the country.
The growing interest is reflected in the tourist numbers. A fortnight ago, the Kenya Tourist Board (KTB) announced that earnings from the tourism sector jumped 26 per cent to Sh 34 billion in the first half of this year, compared to similar period last year.
Then tourism sector is now desperate for hotels beds, given the increasing number of tourist flocking into the country, particularly at the Coast, and the rising number of conferences being held in Nairobi each week.
Opportunities which the government has been marketing to local and international investors through the office of the director of tourism-exits in the North Rift , Western Kenya, Lake region, Nairobi City and Mount Kenya region.
Though Kenya’s property market could be a bit difficult to navigate. Mwaniki says it’s possible to link up with like-minded investors and start on property that is sure to yield high returns.
Mwaniki says Alliance Capital saw the opportunity in the hotel industry and lobbied other investors to develop the property in Nairobi West.
“After other investors, we spoke to Barclays Bank, which agreed to give us a loan and bought the land,” says Mr. Mwaniki, adding that the whole project cost close to Sh 90 million.
Alliance Capital was started by five individuals with expertise spanning real estate, corporate finance and project management. Mwaniki says belief that they had the requisite knowledge and skills to successfully start and run big developments, spurred them on to start the hotel business.
The Alliance partnership is the largest stakeholder amongst those running the 49-bed capacity hotel. Their immediate plan to further improve the facility by upgrading the environment in which it sits.
“The good thing about the hotel is that you are guaranteed business because of its location,’ says Mr. Mwaniki.” This is because it sits on the highway from both Wilson and Kenyatta International Airports, is accessible and also close to Nyayo Stadium, which often hosts a number of events.
But while most investors maybe dreaming of a property market that offers high yields and capital growth at the same time, Mr. Mwaniki says identifying the right market is vital to realizing such dreams.
They first saw the opportunity about three years ago when tourism numbers started shooting up by then, investors were still hesitant , but they went ahead and started planning on how to develop a five-star.
The change in focus to hotels has been contributed to an influx of tourists, and the country’s newfound status as suitable venue for international conferences.
As it stands now, the hotel industry should be a strong contender for investors interested in emerging markets segments. But the lack of enthusiasm has left a few investors competing amongst themselves. In most cases the majority are property investors who are in it to stay and looking at long term returns from investments.
Although not healthy, to some extent, the small number of investors in the hotel property business has driven demand, especially during high seasons, to outstrip supply. Some investors with extra bucks to spare have been capitalizing on the seasonal changes to temporarily let and sub-let properties to tourists at exorbitant rates, especially in hotspots like Coast and Nairobi.
Other investors are buying land in prime areas like Muthaiga, Lavington, Upper Hill and Hurlingham, which they develop and later lease out for use by tourists. Beside the land, they are also buying old single-dwelling premises, which they demolish and replace with tourists dwellings.
Both developers and management consultants agree that most areas frequented by tourists are the new hotspots for commercial development. Of late, these areas have not only witnessed high activity in large building construction, but have also welcomed myriads of tourists who rent housing space for a short time use.
Mr. Mwaniki says that it is still too soon to say if the investment in hotels will continue. But the appetite for quality properties, he says, is healthy.
“Business is promising because despite the fact that we’ve only operated for a few days, we have hosted a number of visitors who gave the hotel very good reviews, “he says.
 
 
 

THE EAST AFRICAN STANDARD

THURSDAY, AUGUST 16 2007

REAL ESTATE

GETTING THE RIGHT PROPERTY IN THE PERFECT PLACE

TOURISM SPURS NEW PROPETY

Even as global hotels chains prowl the Kenyan market, older buildings are undergoing rehabilitation, writes KENNETH KWAMA

Those who know it often refer it as the “house”. The new development, a hotel, sits in a space, formerly occupied by a two-storey flat in Nairobi West. The property called mvuli house, opened for business early this month.

But the significance has not been lost to property industry insiders who now view hotels as the next frontier of development in the country’s property market.

“The number of tourists coming to visit in the first few years has been increasing, with no corresponding increase in bed space because people have not been investing in that area,”says Mr. Anthony Mwaniki, CEO of an investing group called Alliance Capital Partners.

“Realization that tourism will continue to grow has made investors to start looking in that direction. That is why a hotel like Mvuli House was established,” says Mwaniki.

Curiously,though,investments in hotels is being driven not only by tourists looking for holiday homes for their one use , but also investors ruled by rock-bottom prices and the hope of rapid returns.

Global hotel chains like the Kempinski Hotels Worldwide and Accommodation Hotels are the latest to express interest to establish properties in the country.

The growing interest is reflected in the tourist numbers. A fortnight ago, the Kenya Tourist Board (KTB) announced that earnings from the tourism sector jumped 26 per cent to Sh 34 billion in the first half of this year, compared to similar period last year.

Then tourism sector is now desperate for hotels beds, given the increasing number of tourist flocking into the country, particularly at the Coast, and the rising number of conferences being held in Nairobi each week.

Opportunities which the government has been marketing to local and international investors through the office of the director of tourism-exits in the North Rift , Western Kenya, Lake region, Nairobi City and Mount Kenya region.

Though Kenya’s property market could be a bit difficult to navigate. Mwaniki says it’s possible to link up with like-minded investors and start on property that is sure to yield high returns.

Mwaniki says Alliance Capital saw the opportunity in the hotel industry and lobbied other investors to develop the property in Nairobi West.

“After other investors, we spoke to Barclays Bank, which agreed to give us a loan and bought the land,” says Mr. Mwaniki, adding that the whole project cost close to Sh 90 million.

Alliance Capital was started by five individuals with expertise spanning real estate, corporate finance and project management. Mwaniki says belief that they had the requisite knowledge and skills to successfully start and run big developments, spurred them on to start the hotel business.

The Alliance partnership is the largest stakeholder amongst those running the 49-bed capacity hotel. Their immediate plan to further improve the facility by upgrading the environment in which it sits.

“The good thing about the hotel is that you are guaranteed business because of its location,’ says Mr. Mwaniki.” This is because it sits on the highway from both Wilson and Kenyatta International Airports, is accessible and also close to Nyayo Stadium, which often hosts a number of events.

But while most investors maybe dreaming of a property market that offers high yields and capital growth at the same time, Mr. Mwaniki says identifying the right market is vital to realizing such dreams.

They first saw the opportunity about three years ago when tourism numbers started shooting up by then, investors were still hesitant , but they went ahead and started planning on how to develop a five-star.

The change in focus to hotels has been contributed to an influx of tourists, and the country’s newfound status as suitable venue for international conferences.

As it stands now, the hotel industry should be a strong contender for investors interested in emerging markets segments. But the lack of enthusiasm has left a few investors competing amongst themselves. In most cases the majority are property investors who are in it to stay and looking at long term returns from investments.

Although not healthy, to some extent, the small number of investors in the hotel property business has driven demand, especially during high seasons, to outstrip supply. Some investors with extra bucks to spare have been capitalizing on the seasonal changes to temporarily let and sub-let properties to tourists at exorbitant rates, especially in hotspots like Coast and Nairobi.

Other investors are buying land in prime areas like Muthaiga, Lavington, Upper Hill and Hurlingham, which they develop and later lease out for use by tourists. Beside the land, they are also buying old single-dwelling premises, which they demolish and replace with tourists dwellings.

Both developers and management consultants agree that most areas frequented by tourists are the new hotspots for commercial development. Of late, these areas have not only witnessed high activity in large building construction, but have also welcomed myriads of tourists who rent housing space for a short time use.

Mr. Mwaniki says that it is still too soon to say if the investment in hotels will continue. But the appetite for quality properties, he says, is healthy.

“Business is promising because despite the fact that we’ve only operated for a few days, we have hosted a number of visitors who gave the hotel very good reviews, “he says.