Venture into real estate brings solid returns for duo

The first time the Business Daily published a story on eight Kenyans who made this year’s Forbes list of Top 30 Under 30 entrepreneurs in Africa, a reader dismissed the undertaking pointing out that they sounded like they were funded by non-profit organisations and were not viable.

This online reader’s reaction is not new to Ian Kahara and Kimiti Wanjaria, both 29, two of the entrepreneurs on the list. But ever since they conceived the idea of investing in the lucrative real estate sector, countless people have laughed off their idea, including lenders.

Fed up with employment, Mr Kahara and Mr Wanjaria decided to venture into enterprise. The duo spent some time looking for feasible opportunities away from formal employment and it was then that they considered capitalising on the lucrative real estate sector.

“With a demand of 150, 000 houses annually, we felt it was an area worth investing in,” says Mr Wanjaria.

The two bounced the idea among their friends and two others — Thomas Koigi and Johnson Waweru — joined them. Today, the four are gazing at their dream as it quickly forms on a four-acre piece of land in Sigona. The Sigona Valley Project is a multi-million investment on Waiyaki Way, 20km from the Nairobi City Centre.

The development has 30 stand-alone homes with a view to die for, a garden and a spacious parking lot. Already, 70 per cent of the units are sold.  Hass Consult is the marketing agent while Shelter Afrique is the project financier.

“This is what we are telling buyers; drive out of town for a few more minutes and you will still be in town with a garden and enough parking overlooking four hills,” Mr Wanjaria says.

The location lends residents a view of Ngong Hills, Mt Suswa, Mt Kilimanjaro and Mt Longonot, on a clear morning. The site is also about open up as a result of the highway passing through Rironi in Limuru.

The project is currently valued at Sh350 million. A three bedroomed house that was going for Sh10.95 million in 2011 is now Sh14.5 million.

“The people who first bought the property came to site and saw Napier grass and trees. But when they looked at the paper work they were impressed and bought the idea,” says Wanjaria.

To acquire the land, Mr Kahara convinced his grandmother to sell them part of her idle 10-acre land parcel.

“Kenyans are collectors of land. They want to look at the many title deeds and smile yet they earn no reward from it,” Mr Wanjaria says.

“Grandma is entrepreneurial and I guess Ian used that to persuade her. He told her about the money she would earn from the sale against the zero returns she was getting and she agreed.”

The group leveraged on loans, buyers’ deposit and personal money to buy the land. They later sought Hass Consult for professional advice on the market sustainability. The real estate consulting firm took up a survey and advised them based on market demand. Hass Consult also had the final say on the property design.

With professionals on board, money was now what stood in the way. They approached 12 banks for funding, but all of them declined.

“They looked at our profile and age. Our family names didn’t also ring a bell, we didn’t have assets to guarantee the loan,” says Mr Wanjaria.
With such a low profile and some of them out of employment, the lenders were not convinced on repayment.

“Even though we had market analysis on similar projects and had already sold four houses off the plan, they wouldn’t buy it. Luckily we came across Shelter Afrique and they agreed,” he adds.

The Serene Property Limited idea fitted well with Shelter Afrique’s mission of providing housing to Kenyans, which is funding construction.

“We are just the face of the project. Our inexperience has been compensated for by a wealth of professionals on board, like Dipak Kerai the constructor and our architect,” says Mr Wanjaria.

Mr Kerai agreed to carry out the work with no down payment, with the hope of being paid on completion. The show house is almost ready for viewing. The young entrepreneurs are now hoping to enlarge their investment in the sector.

They are targeting houses that will sell for between Sh7 million and Sh10 million. They are also calling on youth to consider investing in real estate.

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