Gated communities are currently in vogue with Kenyans increasingly settling in them. These neighbourhoods are popular because they offer, among several other things, security and amenities in a well-planned manner.
One company, Hajar Services Limited, has capitalised on this popularity to build homes for groups which buy land collectively.
“These groups comprise people who have similar income levels and tastes; they are very particular about where they want to live and want to choose their neighbours,” Mohamed Ahmed, a director at the firm, told Enterprise.
“With normal developers you cannot influence who else buys into the project and can only make minimal changes to houses you buy. Hajar’s clients get a say in everything,” Mr Ahmed said.
Their main clients are bank workers who have access to financing on friendly terms but do not want the hustle of buying land and constructing a home themselves.
Insecurity, technology and Nairobi’s notorious traffic jams have also influenced this trend. Many people today take work home and so things like a home office with Wi-Fi and a gym are a standard requirement.
Jogging and bicycle tracks around the compound as well as swimming pools are also expected. Building homes as a group also saves money.
Mr Ahmed cites the example of a project of 47 homes that the company is building in Kitisuru which are sold to group members at Sh26 million each.
Similar homes in the neighbourhood cost Sh45 million.
Hajar Services, which was ranked 13th in the Business Daily’s 2014 Top 100 SMEs survey, has so far built 10 similar projects in upmarket areas like Karen, Runda Evergreen and Brookside.
“My houses are cheaper because I do not have any financing or marketing costs,” said Mr Ahmed.
He also buys into some of the projects. He takes up excess homes after contributing to the cost of the land and sells them at a profit although group members usually insist on vetting buyers. Hajar’s sister company, Homescope Properties Ltd, develops properties for sale the traditional way; by buying land, building on it and selling finished homes.
“Combining the two approaches safeguards our cash flow in low seasons where Hajar Services can still generate revenue from the construction side where we do not need to invest our own money,” said Mr Ahmed.
Last year, Hajar Services posted a turnover of Sh700 million. The eight-yearold company is currently putting up a Sh800 million project at Isinya for RAF International University, an institution being built by a Qatari investor.
Another ongoing project is an office block for Igad’s Climate Prediction and Administration Centre (Icpac).
Mr Ahmed says his two companies undertake between six and 10 real estate projects annually and pay about Sh4 million weekly in wages to their 500 to 600 employees.
The family-owned business has three directors.
Mr Ahmed handles marketing, legal affairs, procurement and administration; his wife is in charge of finance and human resources; while her brother Salim Hussein handles design together with architects and engineers.
Mr Ahmed graduated from Egerton University with a BA in Mathematics and Economics and worked in the family transport business and a shop in Malindi, which failed.
He then did odd jobs for four years before landing a job at Diamond Trust Bank where he worked for five years until 2005.
“I worked in the bank’s corporate department doing due diligence on applications from developers,” said Mr Ahmed. “While there, I noticed that their margins were really high and asked my brother-in-law to relocate from Malindi where he worked for an Italian construction firm.”
Mr Hussein was initially reluctant to take the plunge, explaining that he did not understand the Kenyan real estate market.
Their first project was in South C where they sold all 20 units in three months.
Poor workmanship, Mr Ahmed says, is one of their main challenges which he attributes to a decline in the number (and expertise) of technical colleges in the country.
“There is a shortage of good masons, plumbers and electricians in the market. Repeat work erodes up to 50 per cent of our profits although substandard materials from China are also a major problem,” he said.