The real estate market in Kenya has been booming in the last decade with new commercial and residential projects springing up across the country’s major urban centres. In the capital Nairobi and its environs, local and international investors are building golf and gated estates, shopping malls, hotels and offices to meet high demand for property.
Alice Kariuki, a professional accountant, teamed up with three other women entrepreneurs in 2009 to develop serviced apartments in Nairobi. Last month, they broke ground with Serenita Apartments, which are targeted at business travellers and consultants who visit Nairobi for weeks at a time.
Kariuki says she was drawn to real estate after discovering how lucrative the sector could be. She worked as an investment manager and was tasked with finding investment options for her employer that mostly included property, shares and treasury bills.
“We revalued all the properties every three years and the value always went through the roof. In fact, it was better business than what our company actually did. I knew this was a sector worth investing in.”
Kariuki and her business partners did “small businesses that are often associated with women” and later decided to embark on a larger project.
“We were never afraid of going bigger because all we would have to do is invite investors,” she says. “We realised that a lot of what men can do, women can do. That has been instilled in us from childhood. As we grew up we were told we could do anything a man could do. Even in finance there are more men than women but sometimes we contribute better ideas in meetings and I feel women should be able to do anything they set their minds on.”
Serenita Apartments comprises 84 luxury units that sell for KSh. 19.75m (US$228,000) each. The project, which is to be completed by January 2016, is located next to Upper Hill, an upcoming commercial centre in Nairobi.
“Most corporate firms are moving from the city centre to Upper Hill and that is driving land prices and demand for real estate and budget hotels. All the banks have built their headquarters there. These firms have consultants who come here for even six months and would prefer to live in a serviced apartment than stay in a hotel. The demand is there and it can only grow.”
According to Kariuki, demand is partly fuelled by the city’s standing as a regional hub, the entry of international firms and Kenya’s growing middle class who are increasingly investing in the sector.
“There is a lot of new money in the market, which is likely to go towards buying land and property.”
A tough journey
However, the journey has not been smooth sailing for Kariuki and her partners.
“Sometimes people get surprised that the project is being run by women. Mortar and brick has not been a domain for women in this country. Most people often question how much we actually know about the construction process. Right from the beginning we decided to hire the best talent and we have been learning along the way. We have a good grasp of what is going on.”
When they sought additional funds to raise KSh. 90m ($1m) for the purchase of the land, banks turned the team away.
“Many banks did not take us seriously. They made their evaluations and gave us all sorts of excuses and refused to lend to us. Eventually we settled for private equity,” says Kariuki. “We want to have good capital appreciation so that we can do another project and prove wrong the doubting Thomases.”
Lessons from entrepreneurship
Kariuki says entrepreneurship has taught her to be resilient and persistent. Since starting the project, she says, they have faced a court battle, encountered bureaucracy in government and had to adhere to changing regulations, none of which deterred them from their goal.
“If you go into business you will encounter numerous challenges along the way, but I think giving up on the dream is the last thing someone should do. It is not easy but you have to persist. There is no learning if you chicken out. You learn more in difficult times. They make you better.”
She advised other entrepreneurs to “consult less in friends because most times they cannot see your vision”.
“They will advise you based on their ‘feelings’ and ignore the facts. I think it is important to work with professionals and experts, share risk with other investors and stay the course regardless of the hurdles you face.”
For those aspiring to invest in real estate, Kariuki says research is crucial.
“Sit with a marketer first and run your idea through them to find out if what you want to establish is something that can actually sell. A lot of people have developed projects and found themselves caught up because they did not research.”
She says women entrepreneurs should not to shy away from taking risks.
“That is not the best way to do business. It is good to take a little bit of risk, otherwise we shall tip toe and arrive safely to the grave.”