What is a property valuation and how do you calculate it?

In practical terms, a property is worth what someone will pay for it. But sometimes you need a ballpark figure before the negotiations get underway. 

A property valuation is a detailed report of a property’s market value. This is defined as the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

As the careful wording of that definition implies, the final sale price is usually different from the valuation contained in the report, as it’s near impossible to predict how people’s emotions, market knowledge and other motivations might affect negotiations.

When would I need a property valuation?

A property valuation offers benefits to both buyer and seller. In providing a clear indication of a property’s market value, it reduces a buyer’s risk of paying over the odds for a property; in offering a detailed analysis of a property’s weaknesses, it can help a seller decide which renovations to make to enhance a property’s value.

That said, the most common reason why people need a property valuation is because their mortgage lender (usually a bank) requests one.

The property valuation serves as a “risk report” for the lending institution, to ensure the security value of the property covers the loan.

The bank needs to be confident that it can recover any outstanding amount owned on the property, should the buyer default on their mortgage.

Some lenders still have in-house valuers, or use internal algorithms or desktop assessments. However, in the majority of cases, [the property valuation] is outsourced to independent valuation companies who are recognised on the lender’s panel.

Property valuations are also often required for financial reporting, for tax compliance, for family law mediation and for determining the amount of compensation given to land owners for easements or land acquisition.

How is a property valuation calculated?

A direct comparison with recent comparable sales forms the backbone of most residential property valuations, though valuers will also take into account the following attributes:

  • the size of the property
  • the number and type of rooms
  • the fixtures and fittings
  • the structure and condition of the building(s)
  • the standard of the fit-out and the property’s architectural style
  • ease of access to the property
  • planning restrictions
  • the property’s location and level of amenity
  • the size of the land
  • the aspect, topography and layout of the block

First, valuers use a handful of recent comparable sales to give them a ballpark figure for the property in question, and then they make adjustments to that figure based on any significant differences found between the above attributes of the properties.

The sales are analysed in terms of land attributes, improvements, location and planning controls… [and are then] compared to the property being valued.

However, other property types can require different approaches. For example, commercial property requires more financial analysis and development sites can require more planning consultancy.

Valuers will also visit the property in question, so that they can assess the condition of the building and make a note of any structural faults and nuances that might affect its market value.

 

Sh30bn Kenol-Isiolo road construction to start in October

Transport Cabinet Secretary James Macharia has announced the construction of the Sh30 billion Kenol-Sagana-Isiolo dual carriageway will commence on October this year.

The CS said the road will link to the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset) Corridor.

The project, according to the Mr Macharia, will open up six Mt Kenya counties that grow coffee, tea, potatoes, beans, maize and avocado making it easier for farmers to transport their produce to the markets.

The counties set to benefit are Murang’a, Nyeri, Kirinyaga, Embu, Isiolo, Laikipia and Meru.

TENDER

The Transport minister, who spoke at Gaichanjiru High School in Kandara, Murang’a County on Friday, said tender for the construction has already been awarded but did not reveal which company was given only saying it was an international firm.

“The road will be constructed in strict adherence of the international standards since it is being co-funded by the Government of Kenya and the African Development Bank. Six of the ten (central Kenya) counties will reap big following the completion of the project,” Mr Macharia said.

He said the project that take 36 months will be built in two phase — 13km from Kenol to Nyeri and 150km from Nyeri to Isiolo.

DEMOLITIONS

According to the Kenya National Highways Authority (KeNHA), some 800 families have been identified for compensation by the National Land Commission, while traders with premises along the road including Kenol, Makuyu Kambiti, Makutano and Sagana markets have been given a one-month notice to vacate the road reserve.

Several premises, including those housing banks, petrol stations, electronic shops and eateries have been earmarked for demolition.

MORE ROADS

Mr Macharia also announced that the Murang’a-Kenol road will only be expanded to ease traffic snarl-up downplaying leaders’ claims that the dualling of the Kenol-Nyeri road would ‘kill’ Murang’a town.

He said Jubilee administration has tarmacked 8,000 kilometres of roads since 2013 and will complete another 2,000 kilometres next year.

“Apart for the Murang’a-Nyandarua road, Mau Mau roads in Murang’a which were used by war veterans will be constructed and the tender has been advertised,” he said.

Story from Daily Nation.

Ajogi Limited bags Kenya’s most promising land selling company award

Ajogi East Africa Estates has been voted the most promising land selling company in Kenya for its competitive pricing and seamless processing of land documents.

The real estate firm with properties in Nanyuki was announced the most preferred company to consider when buying land during the Annual Real Estate Excellence Awards 2019 held at Movenpick Hotel in Westlands, Nairobi.

Ajogi toppled six other competitors in the category for offering its clients competitive prices for land in prime locations, transparency in land transactions, provision of flexible land payment schedules and positive track record in processing title deeds.

“This is no mean feat. We are honoured to receive this prestigious award, it reflects our commitment to offer the best to our current and prospective clients,” said Ajogi East Africa Estates Managing Director, James Mwenda.

The award targeted real estate companies that have been outstanding in positively impacting Kenyans through provision of affordable investment opportunities in the real estate sector over the last five years.

Over the period, Kenya’s real estate sector has experienced exponential growth that analysts have attributed to combined efforts by various players and stakeholders in the sector from land agents, property developers, property consultants, real estate related suppliers and the government.

Ajogi East Africa Estates has been in operations for the last four years, selling parcels of land in Nanyuki. It boasts of a competent team with land surveying and selling services spanning two decades.

The firm has now set its sights high and is looking to expand its business to bigger towns. Next year it will make a debut in the capital, Nairobi and Kenya’s fastest growing town, Nakuru.

“It is part of our bigger expansion plans that will see us rebrand and unveil new service provisions including leveraging on technology to serve our customers even better,” said Mwenda.

In the coming months, the company plans to invest in state-of-the-art equipment to allow it to conduct topographical and Engineering surveys to identify and determine natural and man-made features of the land and its elevations.

It will also firm up its customer relationship management to ensure clients have a dedicated contact person for better advice on land buying offers.

Mount Kenya region develops Sh100bn economic blueprint

Ten Mt Kenya region governors have come up with an ambitious Sh100 billion blueprint to transform the economic fortunes of the vast area.

In the plan, the counties will spend about Sh10 billion each, although most of the investment will be private-sector driven, with the government providing infrastructure such as revived roads and railways to create a conducive business environment.

This comes a year after the governors signed a memorandum of understanding establishing the Mt Kenya and Aberdare Counties Economic Bloc, with a population of 17 million people.

Priority pillars of the organisation are agriculture and agri-business, industrialisation, healthcare, tourism, water and resource management, infrastructure and ICT.

“All governors of the region have given firm commitment to ensure that the economic bloc is fully operational. This will improve the livelihoods of the citizens and all Kenyans in general,” said Mt Kenya Governors’ chairman Joshua Irungu (Laikipia).

The leaders propose a four-pronged strategy to re-engineer the agriculture sector from a single to a three-engine economy — agriculture, industry and services — to create jobs for thousands of youths.

The economic development agenda calls for the input of various stakeholders, with the county and national governments, the private sector and development agencies playing key roles.

The Mount Kenya Foundation, a caucus comprising the region’s prominent business people, such as Equity Bank founder Peter Munga, will lead and coordinate the vision.
It is also expected to provide support to the counties in planning and resource mobilisation.

The blueprint is hinged on industrialisation of agriculture, export diversification and market development, urbanisation and transformation, and up-scaling of tourism. These are regarded as the new frontiers for growth.

A key project for horticulture is the establishment of an industrial and logistic park at Sagana or Makutano towns for packaging, refrigeration, processing, warehousing and distribution of goods.

Packaging houses could serve supermarkets in the region, which are increasingly becoming outlets for fresh foods.

The county chiefs are also proposing the development of a Thika-Nanyuki transport corridor for industrialisation, as it is connected to five of the region’s counties and is served by a major road and railway line.

In addition, the land around Makutano-Sagana and Kiganjo-Nanyuki is relatively cheap. The leaders want the national government to support its development by abolishing capital gains tax that has negatively affected real estate development and revive the disused railway for goods and passengers transport.

They want the line connected to Isiolo to benefit from the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset) corridor, as well as fast tracking of the Kenol-Nyeri Road into a dual carriageway.

Their blueprint also calls for establishment of special economic zones that will allow setting up of light industries such as “business processes outsourcing centres”, computer and vehicle assembly plants, and factories making alternative building materials.

They believe the region is well placed to tap the Persian Gulf horticulture market and even compete with the European Union in horticulture exports.

As part of export diversification, the governors want resumption of miraa (khat) exports to Europe, re-establishment of the cotton industry, posting of agriculture attachés in key diplomatic missions to promote export of non-traditional products, and revival of the Uplands Bacon factory.

The plan also proposes the promotion and branding of the region as a distinct tourism destination, and setting aside of funds to develop niche products such as agro-tourism.

To implement these initiatives, each county will be required to spend Sh10 billion. This could be a challenge to many, considering that most counties are still relying on budgetary allocation from the national government, as opposed to locally-generated revenue.

“The development of an economic blueprint is indicative and not prescriptive. It will require more in-depth prognosis and deeper research to attract the private sector and be the engine of growth for the regional economy,” Mr Irungu said.

Implementation of the economic strategy is, however, dependent on development of a harmonised policy for the member counties.

“We are yet to set up the bloc’s secretariat because there is no policy. A bill on the bloc should also be presented to county assemblies for discussion and approval,” said Laikipia county executive committee member Jane Putunoi.

The governors decided to set up the secretariat in Nanyuki town. – NATION

How new Isiolo-Marsabit road is boosting commerce as security improves

Hussein Marsa is a bus conductor along the Isiolo-Marsabit road. Muscular, bearded and loud-voiced, he seems from another era not too long ago; one in which the rough terrain that was the Isiolo- Marsabit- Moyale road demanded tough travellers.

No motorist would attempt a journey on this road in a two-wheel drive vehicle. Transport was almost exclusively by trucks and lorries. Yet, Marsa had to earn his keep by ferrying commuters along the treacherous 244km route.

He would depart Isiolo at 6a.m and arrive in Marsabit 13 hours later dusty, hungry and angry, his mind engrossed in the awaiting return trip.

Ideally, it should take just over three hours to cover the distance driving at 80kph on a smooth road. Marsa says he would have laughed on your face months ago if you hinted this could be possible on this route.

But he is now living this reality.

“We currently take only three and a half hours from Isiolo to Marsabit. I make three trips a day,” he says.

More money in the pocket, and then some, as he says vehicle maintenance cost has really gone down and he no longer spends on accommodation.

“We now use this Toyota ‘Box’ vans; (the vehicle looks like a bigger version of the Probox) lorries belong in the past,” he says before hurriedly jumping onto his matatu to embark on the second trip of the day.

Marsa’s relief is shared by many within the dusty Isiolo town and along the route to Marsabit, an outpost of the Colonial Northern Frontier District. Once, close to a century ago, the colonialists wanted to replicate Britain’s Great North Road in Africa, connecting Cape Town to Cairo.

New beginnings

The Isiolo Moyale road that connects Kenya to Ethiopia was part of this grand plan, but it collapsed, marginalising about 70 percent of Kenya’s land, ignored by successive governments.

But the ambitious the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor project has instantly transformed Isiolo, giving the locals a new lease of life.

The project aims to ensure seamless connectivity between Kenya, Ethiopia and South Sudan, with highways, airports, railway lines and resort cities among its key features.

As part of the project, the 508km section from Isiolo to Moyale is over 97 percent done, with only civil works pending. According to the Lapsset Corridor Development Authority (LCDA) July 2016 Report, travel time here has reduced from three days to about 10 hours.

The entire 1566km highway all the way to Hawassa in Ethiopia is expected to be fully completed by December this year.

A one kilometre runway has been completed at Isiolo Airport, with construction works on the terminal building currently at an advanced stage.

Cruising through the section between Isiolo to Marsabit is an absorbing experience. The spanking new tarmac, juxtaposed with the yellow markings contrasts dramatically with the shadowy hills that hug the landscape.

If lucky, one can spot wildlife; from elephant herds to giraffes grazing around.

There is visible increased level of economic activities along the road. Shops and residential houses are quickly sprouting by the highway, teeming with fresh groceries that would hitherto not have survived the vagaries of road transport.

According to the LCDA report, the road has increased market access, improved delivery of government services, triggered a rise in land value and created employment opportunities.

In June 2015 a County Stakeholders Consultative forum from the region reported that maternal deaths were decreasing as a result of faster access to medical facilities.

Coupled with the planned resort city in Isiolo as well as the almost completed Isiolo International Airport, the Isiolo-Moyale road is expected to significantly boost tourism in Northern Kenya.

This is considering the fact that the road has further opened up Mt. Kenya, Samburu, Meru, Aberdares and Marsabit National Parks as well as the wildlife conservancies within the region.

But more importantly, it has helped boost security in a region synonymous with bandits and inter-ethnic conflicts. Three years ago, a CapitalFM news team narrowly escaped a bandit attack on their way to Marsabit. But some passengers lorry (the only means of transport then) was not too lucky.

“In Marsabit County, the security agencies have reported they are able to respond timely to security threats and hotspots and the conflicts especially inter-community have significantly reduced,” the report states.

However, compared to the Mombasa-Nairobi highway, and further up to Uganda via Nakuru, the Isiolo Moyale road seems underutilised as evidenced by lonely drives only broken by the occasional car and camels sauntering freely on the new tarmac.

What makes Mount Kenya region the coveted real estate destination?

Mount Kenya region, away from Kiambu, is emerging as a major real estate investment destination as gated residential estates, holiday homes, hotels, adventure parks and golf courses at various stages of development dot the landscape.

The region comprising Murang’a, Kirinyaga, Nyeri, Laikipia, Embu and Meru now has the largest development pipeline, according to a recent Cytonn Investment real estate report.

Meru and Nanyuki, for example, have been identified as a magnet for investors due to population growth and tourism activities.

The region is largely a leisure tourist market whose main attractions are the Mt Kenya, a number of national parks, game reserves and animal orphanages. For Nanyuki, the area has a high purchasing power from both the residents and the military personnel.

“Mt Kenya region is the best performing retail market with yields of 10.1 per cent at 90 per cent occupancy,” the report stated.

It comprises neighbourhood and community malls with average rental yield of 10.1 per cent, the Cytonn report says.

In Meru town, there is an ongoing mixed-use development of Greenwood City mall, which by August was 35 per cent complete.

The development comprises not only the mall, but also apartments. Regional retailer Nakumatt is the anchor tenant. Fusion Capital has recently stated that it expects that the construction will be completed by the end of the third quarter next year.

The Cytonn report notes that the attractiveness of real estate, which contributes nine per cent of Gross Domestic Product (GDP), is that it has consistently outperformed other asset classes in the last five years, generating returns of between 25 and 30 per cent.

Laikipia County due to its vast wildlife conservancies and ranches has become a favourite destination for wealthy tourists who pay a fortune for the chance to live with wildlife in the pristine grassland.

Conservancies and ranches like Ol Pejeta, Lewa, Ol jogi among others have made Nanyuki a focal point for tourists visiting game reserves in Laikipia and Samburu counties.

Europeans, particularly Britons, are lured by the good weather that prevails all year round. Most have even settled in this quiet county or bought holiday homes near Nanyuki town, close to conservancies, expansive parks and other attractions like Mt Kenya, Lolldaiga hills, the Aberdare ranges.

For the Britons, the connection with Laikipia is not only embodied in the military personnel training in the neighbourhood, but also in less tangible aspects such as Prince William’s proposing to his long-time girlfriend, now wife, Kate Middleton, in a countryside cottage on the slopes of Mt Kenya when the lovebirds secretly flew into the country in October 2010.

Some Britons have permanently settled in the area, owning homes and ranches.

Swiss International, Mt Kenya Holiday Homes in Sh7bn pact

Global hoteliers Swiss International has made an entry into the Kenyan hospitality market following a partnership with Mount Kenya Holiday Homes Limited.

Under the partnership worth Sh7 billion, Swiss International which owns 27 hotels in three continents, will become the sole hospitality provider of the resort.

Hence, it will develop and manage a 75 suite hotel, two restaurants, a bar & lounge and a villa spa among others, according to Swiss International Hotels Chairman and CEO Henri Kennedie.

“We will be working to provide a hospitality concept that will give the more than 300 expected home owners with five star hotel treatment,” said Kennedie.

The construction of Mount Kenya homes kicked off four years ago with 22 homes having been completed.

For this reason, buyers of the homes will therefore own homes on a five star resort.

According to the Developer of Mount Kenya Holiday Homes Ronald Ndegwa, 281 homes are scheduled to be completed with the estimated number of dwellers being 1,200 ultimately.

The prices of the homes differ with some starting from Sh28 million. However, under the new agreement, the prices are bound to differ.

“Apart from the 22 homes, the construction of a 9 hole golf course which is reversible to being an 18 hole golf course, has been underway and is ready to be opened. This is part of the package that we are offering those who choose to buy our homes,” Ndegwa said.

Apart from the golf course, the development will also have a clubhouse. Broken down, the 281 homes will consist of 67 villas, 128 apartments and 86 townhouses.

Additionally, the development will include a conserved natural-forest area hosting a variety of wildlife that include Zebras and Gazelles among other animals.

Scenic foothills of Mount Kenya

Swiss International’s decision to enter the Kenya market is based on the scenic foothills of Mount Kenya, the surrounding wildlife including sites in Nanyuki, Nyeri, Isiolo and Samburu regions.

Asked on whether the Swiss partners were not shy of entering a market whose tourism has been on its knees, Kennedie said that the outcome of the project was too luring to get cold feet.

“We knew what we were getting ourselves into. Kenya has had a reputable tourism industry for a long time. Furthermore this project is set to bring in a lot of attraction both locally and internationally.”

Kennedie estimated a 20 percent return on the initial investment at an undated time.

Through the deal, the project has therefore acquired a new brand name and will be known as Swiss International Resort Mt Kenya going forward.

Source: Capital Fm