Nairobi’s skyline is changing, propelled by multinationals setting up regional offices and a growing demand for high-end housing. Le’ Mac, is a proposed 22 storey tower, featuring both residential and commercial components. The Dubai-styled project is being developed by a local firm, Mark Properties, and will cost an estimated US$41.5 million upon completion in 2015. Ravi Vasta, managing director of Mark Properties, told How we made it in Africa’s Dinfin Mulupi how an influx of expatriates and diplomats is spurring demand for unique real estate projects in Nairobi and his ambition to develop the tallest building in East Africa.
What inspired you to develop Le’ Mac?
We wanted something new for Kenya and unique. We started Mark Properties in 2004 and since then we developed two luxury properties in Lavington (a high income residential suburb in Nairobi). For the Le’ Mac project, we specifically wanted something unique that would attract investors. We took our team of consultants to Dubai where there is a lot of such projects, after which they designed Le’ Mac.
How far has work on the development progressed?
We have started excavation at the 1.8 acre piece of land in Westlands (an upmarket suburb of Nairobi) where the Le’ Mac project will be constructed. We will begin construction towards the end of April and we expect to complete the project by the end of 2015. Le’ Mac will have business space on the ground floor that will accommodate a banking hall and coffee lounge. The next six floors will be dedicated to office and commercial space. We will have another six floors of residential space and a double storey Le’ Mac Sky club housing a gym, spa, steam and sauna rooms.
Describe the market response since the launch of Le’ Mac.
We have placed six floors of one to three bedroom residential [apartments] on the market, the majority of which is sold out. However, the market is slightly slow because of the elections and the high mortgage rates, which are just starting to come down.
What kind of buyers are you targeting?
About 90% of the people who have bought the residential spaces are doing so for investment purposes. They don’t want to live there themselves but they are targeting diplomats and expatriates who are coming to work here. Le’ Mac looks and feels like a five-star hotel. Our services have been tailored to fit international standards, which is what expatriates are used to. For instance, we are investing a lot in security systems within the building. Investors will make good returns. The majority of the buyers are local investors and the diaspora. They would like to own property, but the price of land in preferred locations for these kind of investments is too expensive. For instance, in [Nairobi’s] Westlands [area], you would need nearly 100 million shillings ($1.15 million) to purchase a quarter an acre of land.
You focus on luxury properties while research is showing saturation in this market. Your thoughts on this?
There is still demand for luxury projects especially as an investment proposal. Investors buy luxury houses mostly for rent. There is a lot of demand for houses on rent and investors have the money to purchase luxury houses. We are seeing more expatriates coming to Kenya and they want houses that match up to international standards.
Low cost and medium housing is for the local market only. This market is totally dependent on the mortgage rates. When it goes up, the market goes silent. If there are special rates, the market starts booming. Because of the high mortgage rates, people prefer to rent instead of buying. Mortgage rates need to come down to 10-12% (currently between 13-20%). We also need more investors in the real estate sector.
Describe some of the challenges you face in developing these properties.
We face challenges dealing with the government especially due to delay of paperwork. The good thing is that today we can access most of our construction requirements in Kenya. It is very easy to source materials, which was not the case ten years ago.
Can we expect similar projects such as Le’ Mac?
We are looking for land where we intend to develop another high-rise project after we finish developing Le’ Mac. We want to build the tallest building in East Africa. That will be our next project. We will have commercial space, hotels, residential space and shopping malls. We will combine everything in one tower. We need new and unique things to attract more investors. These kind of projects show that Kenya is progressing. Dubai became an icon because of its tall buildings. We want the same in Kenya, something that will attract tourists and even further investment in the industry and the country.