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Housing finance -return on houses sold
heri
#1 Posted : Wednesday, May 15, 2013 8:33:40 PM
Rank: Member


Joined: 9/14/2011
Posts: 834
Location: nairobi
I have seen HF is selling apartments in Riruta
two bedroomed apartments which is 87 square meter is going for sh 5.25m

Based on my experience elsewhere, one unit of 87 square meters will cost not more than sh 1.5m to construct

So even if i assume the land they are using maybe a bit costly and also take into account their management costs etc

would i be wrong to assume that at worst, the cost of such a house is not more than sh 3m which means HF can make about sh 2.2m per unit (75% return)

My conclusion is that HF should make investors very good returns in days to come
babachemu
#2 Posted : Wednesday, May 15, 2013 9:18:36 PM
Rank: New-farer


Joined: 4/11/2013
Posts: 11
Location: NAIROBI
@HERI,
the average construction costs in Nairobi for a nicely finished house is between Ksh. 35,000-38,000 per meter square. so taking an average of 38,000 per square meter and multiplying by the 87 square metres, you will realize that the construction costs is about 3.3 million- this is construction costs without the land aspect.

the 1.5 million construction costs you are talking about is way too low. maybe some shoddy work by a poor contractor without the finishes. so i think HF isn't playing dirty tricks here because you will realize after calculating that they might end up with a profit margin of just 1 million for every unit.

If you want a copy of the average construction costs in the different cities in Kenya, you can request so.
Mjasirii
#3 Posted : Wednesday, May 15, 2013 9:27:52 PM
Rank: Member


Joined: 11/8/2012
Posts: 257
babachemu wrote:
@HERI,
the average construction costs in Nairobi for a nicely finished house is between Ksh. 35,000-38,000 per meter square. so taking an average of 38,000 per square meter and multiplying by the 87 square metres, you will realize that the construction costs is about 3.3 million- this is construction costs without the land aspect.

the 1.5 million construction costs you are talking about is way too low. maybe some shoddy work by a poor contractor without the finishes. so i think HF isn't playing dirty tricks here because you will realize after calculating that they might end up with a profit margin of just 1 million for every unit.

If you want a copy of the average construction costs in the different cities in Kenya, you can request so.



I wouldn't mind to have a look at the report.
heri
#4 Posted : Wednesday, May 15, 2013 9:30:14 PM
Rank: Member


Joined: 9/14/2011
Posts: 834
Location: nairobi
Thanks for the feedback

my figures are based on my own experience where i have sourced the materials and supervised all the work.

quality i must say was good

Though what i was saying that at highest, i would say sh 3m per unit because of the probably the higher cost for the land in nairobi

babachemu
#5 Posted : Wednesday, May 15, 2013 10:09:55 PM
Rank: New-farer


Joined: 4/11/2013
Posts: 11
Location: NAIROBI
@Mjasirii,
Am trying to attach my copy for you but am experiencing a problem. kindly follow the folloing link:

http://stroikagroup.word...kenya/construction-cost/
gregory
#6 Posted : Thursday, May 16, 2013 10:25:58 AM
Rank: Member


Joined: 12/2/2011
Posts: 176
from my experience as a QS, i don't think Heri is too far off. most houses for sale are sold for a minimum of 3x the construction cost( minus land value). an apartment being sold for 20m+ will most likely have a construction cost of around 7m
wilyum
#7 Posted : Thursday, May 16, 2013 11:00:36 AM
Rank: Veteran


Joined: 12/21/2011
Posts: 1,010
@babachemu, i think your cost and that of stroika is too high..

@4architect and @pablo can confirm this
josimar
#8 Posted : Thursday, May 16, 2013 11:11:51 AM
Rank: Member


Joined: 7/6/2010
Posts: 242
Quote:
@Mjasirii,
Am trying to attach my copy for you but am experiencing a problem. kindly follow the folloing link:

http://stroikagroup.word...kenya/construction-cost/


What about costs for constructing a simple 3 bedroom maisonette such as the langata / south c or south b houses?
a4architect.com
#9 Posted : Thursday, May 16, 2013 11:47:21 AM
Rank: Veteran


Joined: 1/4/2010
Posts: 1,668
Location: nairobi
wilyum wrote:
@babachemu, i think your cost and that of stroika is too high..

@4architect and @pablo can confirm this


Construction cost for single storey buildings start from a low of kes 17,000 per m2 for very shoddy poor quality construction without all finishes to kes 25,000perm2 for a middle class look in rongai, kitengela, ruai etc to kes 45,000 per m2 for the high class look seen in runda, muthaiga etc

For multi storey, the cost goes higher. The lowest cost for a multi storey done in a poor shoddy way without finishes is kes 21000 per m2 for areas such as kayole, mathare north etc and kes 26000 for middle calss areas such as rongai, kitengela, ruaka and kes 45,000 for high cost areas of lavington to kes 60,000 per m2 for cbd upperhill westlands structures.
As Iron Sharpens Iron, So one Man Sharpens Another.
a4architect.com
#10 Posted : Thursday, May 16, 2013 11:58:04 AM
Rank: Veteran


Joined: 1/4/2010
Posts: 1,668
Location: nairobi
[quote=babachemu]@Mjasirii,
Am trying to attach my copy for you but am experiencing a problem. kindly follow the folloing link:

http://stroikagroup.word...enya/construction-cost/[/quote]

The costs in the above link are correct. They seem high because these are costs that include contractor profit obtained through tenders completed in the last 1 year. For the low cost houses, there are not drawings, no contracotrs and no documentation so this info cant be available in the Ministry of Works reports.
As Iron Sharpens Iron, So one Man Sharpens Another.
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