I had planned to develop some plot in 2019 and changed my mind. Now the BoQ in 2019 was Shs. X… Now the current BoQ is Shs. 2X… Rental increase is only 10% since 2019… It now does not make any sense to build and therefore looking at other options to invest… not mjengo now… I am a trader and invest extra cash that I cannot effectively absorb in my trade in the medium term…
In the meantime, there are many ongoing construction projects sprouting all over Nairobi and it’s environs… I had questioned the source of the construction funds elsewhere here… The conclusion was that it was cash being laundered by looters…
If that is the case, we are living in a cursed nation…
Not too long ago cement was 520 wholesale…today i get it at 780. Next year imported interior materials will have their vat increased so budgets will be adjusted.
Yet 20 storey buildings are being constructed all over… Go to Parklands/ Westlands now and you will see what that means… Now I cancelled my plans completely… I had developed flats before 2019 and the recovery of funds invested was taking around 10 years… Now it would take close to 30 years… nonsensical for earned funds…
Yet the upcoming constructions appear to be immune to the same information… I still bet that they are laundering money… But how long will it last before the industry collapses…? Anyway, since it’s stolen cash, it will not collapse but affect the ROI…
I have the two BoQs… How much was Y10 and D10 then? How much is it today? How much was a 50kg bag of cement then, How much is it today? And why do you think they are repackaging from 50kgs to 40kgs and sell as 50kgs? How much was a ton of sand and ballast then, how much is it today? How are people constructing today as it was before then with all the zillions of regulators and KRA on site all the time?
So, my BoQs are guesswork? BTW I have two independent BoQs fron two QS… the difference between them is Shs. 3m! So, it’s as I have quoted above… the one for 2019 is half what I have now… and of course, I am shelving the project… it’s stupid to proceed with that kind of project… unless I am cleaning money…
Why do you want quick returns? A 10% ROI is pretty standard in Real Estate. Anything above that is exceptional. This means 15 years is a perfectly okay time-frame to make back your money.
Why must you make it back in 6-8 years? That’s impossible! Even if the cost of construction has gone up, you can still make a 10% return every year. What exactly is the problem? That you’ll instead have to wait for 15 years?
Look at it differently. Building now means you can get access to credit as soon as possible. That’s what makes Real Estate worth it. Then you can use that money to take other more riskier bets that can make you money in 2 years.
Real estate is a means to store your wealth AND make a little more. It won’t make you wealthy. However, using it as collateral for leverage opens up more possibilities. Imagine a money printer making you 400k every month in perpetuity? You an go to KCB and immediately get 15M cash to do other things.
I think it’s still worth it to build those rentals.
You are right above there… But of course if you used to spend a total of Shs. 40m to receive Shs. 400k monthly rent a while ago and now you have to spend Shs. 90m to receive 410k per month, it is not enticing to invest in rentals and other options have to remain open…
I have a BoQ here for 40 Units… The budget is Shs. 245m (excluding plot value) from one QS and another for Shs. 248m (excluding plot value) from another… The current average rental yield in that areas is Sh. 35m per unit… I had a budget of Shs. 120m in 2019 for the same project… the rental yield then averaged 30k per unit… In Nairobi…
Chile. 575k