Kenya’s real estate sector is dominated by high-net-worth individuals and corporations, with very few youths investing in the industry, mostly due to challenges in accessing financing. Kimiti Wanjaria (28) and Ian Kahara (30), the co-founders of Serene Valley Properties, represent a new crop of youths who are teaming up to invest in the property market. The two IT professionals are behind the Sigona Valley project, a KSh350m (US$4.2m) gated estate outside Nairobi. The duo shared their experiences with How we made it in Africa’s Dinfin Mulupi.
Tell us more about the Sigona Valley project
Kahara: It is a gated community located about 20 minutes drive away from Nairobi. It has panoramic views and beautiful scenery. In the north it overlooks Mount Kilimanjaro. We have Mount Longonot to the south and in between we have Suswa Mountains just before Masai Mara and the Ngong Hills. It is set up on a hill overlooking two valleys. We are constructing three and four bedroom villas in three different house designs. We plan to hand out the 30 villas by August 2013. We are targeting the middle-income market segment. We believe now is the time to buy because we expect the value to appreciate. So far we have sold 50% of the units.
How did you get into property development?
Wanjaria: We came together because we thought real estate is a new frontier due to the housing shortage in Kenya … One day when we were having drinks we began talking about how to unlock potential in parcels of land that we own. We gambled with it and registered a company. We found two other partners Johnson Waweru and Thomas Koigi, who believed in the idea and we hit the ground running.
Real estate is capital intensive. How did you finance the project?
Kahara: The project is structured in such a way that we, the developers, have to finance part of it. To fill this gap, we thought of several options, one of them being debt financing, but getting money from the banks was a huge challenge. We talked to 12 banks and gave them proposals. They all asked for three years audited accounts, which we did not have. They focused on our own early-stage career profiles, and the assets we had already accumulated, rather than the project itself. In short, they did not want to finance us and this was very frustrating. Everyone told us our idea was good but we could not raise money to implement it. We then approached pan-African development funding institution Shelter Afrique. They looked at the project and gave us a loan of KSh200m ($2.4m).
What challenges have you faced?
Wanjaria: Other than funding we also found out that most of the consultants we worked with in the real estate industry are very traditional. There is a certain way they want to do things. We found that to be a bit too rigid for us. As a dynamic team, we are raring to go. Getting statutory approvals from the government and council offices was also challenging because of bureaucracy. Most of the people we consulted with were very discouraging. They were saying interest rates are at a ten year high and that we have never built even a single house and now we wanted to build 30. They told us to try after 15 years. As a team we were wondering, why should we wait until we are 60 to do something we can do today?
What advice can you give to young people interested in investing in real estate?
Wanjaria: They should document their ideas. We have seen the project through on paper as successful. We are diligently implementing step by step. When you can present your ideas properly, people tend to support you. They should also consult with the right professionals. You can hit success at 30; you don’t have to wait until 60. Have unwavering commitment and be patient.