Welcome to our brief update on building, construction and real estate in Kenya. We highlight the main features highlighted in the course of the last 7 days. In this issue, we highlight the major items covered by the media. We also highlight the main construction events you need to plan for as well as Training Opportunities for anyone interested in Facilities Management organized by Quantum Ltd and a two-day event held by BORAQS on Construction Project Financing. We have also highlighted on Events such as the upcoming Totally Construction Expo East Africa.

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IN THE NEWS…

Main Feature: Britam Sells Stake in Acorn Group

Last week, British American Investment (Britam) revealed that it sold the 25% stake it held in Acorn Group Limited, a project management and property development group. The transaction took place in 2015 and it was valued at Kshs 299.6 million – a transaction that did “not recognize any gains or losses”. This, therefore, places the value of Acorn Group at the time of signing the deal in November 2013 at Kshs 1.1984 billion.

In 2012, Britam Group set up a subsidiary company, Bramer Property Ltd, “to focus on development of master planned communities, shopping malls, commercial mixed use development, commercial offices, affordable and modular housing and budget hotels.” It is through Bramer Properties Ltd that Britam acquired the 25% stake in Acorn Group. At the time of signing the deal in 2013, Acorn Group was handling a project portfolio in the East African region valued at above Kshs 25 billion.

Had the agreement sailed through, Acorn would have focused on project execution while Britam would have concentrated on raising capital and structuring investments through British American Asset Managers Limited.

After the fallout and legal battles in and out of courts, the executive team of British American Asset Managers Ltd resigned and formed Cytonn Investment. Britam Group focused on “in-house property development”. Cytonn then became the lead transaction adviser and fundraiser for Acorn Group’s projects valued at Kshs 40 billion. Later on, Cytonn created Cytonn Real Estate (CRE) after dropping the deal with Acorn. Acorn signed a 50:50 joint venture deal with Helios Investment Partners that was recently approved by the Competition Authority of Kenya.

It is speculated that the Acorn-Helios joint venture deal is strategic considering that Helios signed a deal with The Orange Group to buy the latter’s 70% share in Telkom Kenya. Telkom Kenya has real estate property across Kenya valued at more than Kshs 13 billion – property which Helios, through Jamhuri Holdings Limited, will most likely develop through Acorn Group.

Industrial Real Estate: KenolKobil to Set Up Lubricant Factory

On 19 May 2015, KenolKobil signed a joint venture deal with BP Southern Africa that would have seen them “set up a new blending plant in Mombasa at a cost of between US$ 10 million and US$ 15 million”.

On 4 May 2016, the management of the firm confirmed that the budget for the plant had been approved although the launch and commencement of the plant’s construction is yet to be confirmed.

Industrial Real Estate: Progress on the Leather Industrial Park in Machakos

Did you know that there exists a body known as The Kenya Leather Development Council? The Government of Kenya, through the Export Processing Zones Authority, plans to set up a leather industrial park on 500 acres in Kinanie in Machakos County as part of the Vision 2030 plan. The complex will comprise of leather processing factories and tanneries. So far, 10 applications by interested investors have been received.

Commercial Office Real Estate: Kenya Might Just Lose out on AfreximBank HQ to Ethiopia

The plans to establish a Kshs 3 billion head office for the African Export-Import Bank (AfreximBank) in Nairobi are hanging on the balance. This is due to the likely failure by the Government of Kenya to “complete the legal formalities of establishing the branch in Nairobi by 30 September 2016.” This will compel the board of the multi-lateral development bank to possibly relocate the regional head office to Ethiopia. In November 2015, the Cabinet approved the construction of the office in Nairobi.

The reasons given range from communication challenges to taxation and diplomatic privileges. Read more about the diplomatic tussle.

Financial Planning: Poor Financial Planning Leads to 176% Increase in Cost of Army Barracks Apartments

What can make the cost of a Kshs 346 million shoot to Kshs 957 million? This is what happened to a 10-year old project that would have delivered 144 apartments at the Gilgil Army Barracks.

According to the Office of the Auditor General, the project meant to be completed in 100 weeks starting from October 2005 saw the contractor given an 88-week long extension of time. When the contract given to Capital Construction Company was completed, only 61% of the job had been done and the contractor had been paid 86% of the contract sum.

What reasons could probably be cited for this non-performance of the contract? Keep reading.

PPP Projects: Compensation Claims Slow Down Nairobi’s KShs 300 Billion Housing Plan

The redevelopment plan by the County Government of Nairobi to redevelop 7 estates in Eastlands has been hit by delays arising from compensation claims by the residents. The Public-Private Partnership (PPP) estimated to cost Kshs 300 billion was to start in July, was to see the demolition of houses and the construction of 14,000 housing units.


EVENTS/EXHIBITIONS

Event: Totally Construction East Africa 2016

This year’s Totally Construction East Africa event will be held at the Laico Regency Hotel in Nairobi. The event, organized by Hypenica, will run between 4th and 5th October 2016.

Essentially, these are four events under one roof. In this year’s event, you will be provided with methods to increase sustainability in construction projects within the East African region. You will access innovative building systems, quality control enforcement and techniques and alternative technologies that can significantly reduce the cost of construction.

Totally Construction EA 2016

The four events in this year’s Totally Construction East Africa are: The African Cement and Concrete Summit, The Housing for East Africa Forum, Commercial Property Developers East Africa Briefing and Digital Construction East Africa.

By attending Totally Concrete East Africa 2016, you are guaranteed of front row access to construction business opportunities of all sizes across markets in East Africa.


TRAINING OPPORTUNITIES

Facilities Management Foundation Course by Quantum Limited

Quantum Limited is a Kenyan consulting and training firm that has developed and delivers international Facilities Management (FM) training program in Kenya. The course targets individuals at management and technical levels in organizations who are involved in planning, management, design and operation of properties, buildings, equipment and machinery – among other things.

Quantum will hold a four-day course on Facilities Management Principles & Practice to be held between 23rd and 26th August 2016. The course will cost Kshs 79,600 plus 16% VAT per participant.

For more information, contact Elsa Ochola through email at elsa.ochola@quantumfm.com.

Continuous Professional Development (CPD) Seminar by BORAQS

The Board of Registration of Architects and Quantity Surveyors (BORAQS) will hold a two-day CPD seminar on 1st and 2nd September 2016. The training is themed “Project Financing and Investment Planning” and it will be held at Safari Park Hotel. The event targets architects quantity surveyors as well as property developers, contractors and anyone interested in attending the event.

Participants will learn more about – among other things – project financing in construction, project financing models and management of project financing agreements. More details about the CPD seminar are available here.


OUR FEATURE: History of Construction in Kenya – National Construction Corporation

Read our latest post on the historical development of construction in Kenya. In Part Five, we focus on the formation of the now defunct National Construction Corporation and its role in the building, construction and real estate development in Kenya.


Your Feedback is Welcome

We would like to hear more from you. Do you have an idea of how we can improve this newsletter and blog? Is there any particular information you’d like us to feature more in-depth? Or do you know of a particular building product or supplier you’d like us to feature? An event maybe? Then let us meet@building.co.ke and have a chat. Remember to share this newsletter with your colleagues and friends.