Youth Defy odds to venture in Real-Estate Business

By Eric Akasa

A group of four young entrepreneurs have bet their fortunes on the lucrative real estate sector, in a move that offers a lead to thousands of job seekers in Kenya, creating a 30-home multi-million development, Sigona Valley, as an exclusive gated community located in a serene environment in West Nairobi.

In their late 20s, the proprietors of Serene Valley Properties Limited launched Sigona Valley in March 2012, and have since sold 50 per cent of the homes, having raised secure non-bank, development finance to fund their project.

“One day as we sat talking, an idea took us that we need to defy the odds of employment and get into investment. Real estate was the boom, and we bought the idea,” notes Mr. Kimiti Wanjaria, Director, Serene Valley Properties Limited, the developer of Sigona Valley.

They are today putting in the estate's infrastructure, and holding their groundbreaking ceremony on the homes, which will be complete - in a genuinely stunning setting - from May to August next year. However, the denouement of their dream has been brought about through absolute determination.

“We approached 12 different banks, most locals, for funding, but they were more focused on our personal profiles and financial background and thus our ability to repay the loan if the project snarled.” says Mr. Kimiti.

It was then that the four approached development funders for construction financing. These financiers are charged with promoting national development through funding private initiatives.

“The DFI was majorly concerned with the fundamentals of the project, its viability and the selected consulting team,” adds Mr. Kimiti.

This DFI offered 60 per cent of the project funding; an alternative source of funding that has “cushioned” the young investors from the still prevailing high interest lending rates.

“We then approached Hass Consult to model and manage the project on a pre-sale basis to raise ongoing funds from buyers’ deposits,” says Mr. Kimiti. The four graduates themselves provided the development land as their equity.

With unemployment rates in Kenya reported at 40 per cent in 2011, and 61 per cent of this group comprising of youths in the 20-35 age bracket, the four young property developers, are now profoundly repositioned and fully engaged in applying all they have learned, in a leap that many young professionals are now chasing.

According to data from the registrar of Companies at Sheria House, over 200 companies and 300 businesses are registered on a daily basis, with the number of youths seeking to register their own businesses rising significantly over the years.

About 90 per cent of businesses registered in Kenya each day are by people below 35 years.

The majority of the youthful entrepreneurs are interested in industries such as ICT, music, food and catering, transport, media, communication, design and fashion.

However, lucrative sectors such as real estate, which has remained dominated by high net worth individuals and corporations, is also offering opportunities for now a small vanguard of youth investors, thanks to a steady widening in options for access to capital.

“Real estate investment is mainly occupied by those with accumulated savings or investment seeking institutions, but youths have a wide range of opportunities they can exploit,” remarks Ms Carol Kariuki, the Managing Director of The Mortgage Company.

Ms. Kariuki said that the youth can now access funds to purchase actual real estate assets either as individuals or investment groups, for rentals, trade in properties, or to become developers, or trade in Reits on the Nairobi Securities Exchange.

At Sigona Valley, the young investors have priced the houses to attract the middle-income market segment to an area with significant growth and capital appreciation potential. The development is offering 3 and 4 bedroom villas in three different house designs for between Sh12m and Sh16m, in a tranquil gated community set on 4 acres, a stone's throw from Waiyaki Way and 5km from Sigona Golf Club.

Each of the 30 homes sit on approximately 1/10th of an acre with access to community facilities such as borehole water supply, solar hot water heating, waste water recycling and secured boundary walling.

The Sigona Valley development is costing the investors Sh350m.