Tips for successful real estate development
UNICEF estimates that the Kenyan population has an annual growth rate of 3%. This, coupled with the expansion of the middle-class population, is an indicator that the demand for housing will continue to grow. It also explains why affordable housing has become a major focus for the government as well as property developers. It’s the first law of economics; demand drives supply.
Real estate as an alternative investment will, therefore, continue attracting investors because of the potential returns such as capital appreciation and rental yield. Capital appreciation is the rate by which property gains value over a period of time, while rental yield is the return one makes on their investment each year from rent.
So how do you become a successful real estate developer?
- Credible research: Before making any moves, you need to devote a lot of time to research. This entails the sourcing of a potential site to determine its viability, the type of developments to undertake, and how best to implement the concept while fully exploiting available resources. With real estate, it’s very important to get it right before putting in any resources because it will save you from low uptake and mitigate market dynamics.
- Invest in a qualified project team: It is very important to involve qualified architects, engineers and quantity surveyors throughout the whole design and construction period. Putting up a house might seem pretty straightforward until you are in the middle of a project and everything starts to go wrong. A good project team will assist in managing the risks associated with the project and also ensure the project is properly executed within the desired time and cost.
- Uphold project quality: Throughout the project life, there will be instances when you have to cut back on some expenses and revise your costs. Even so, caution is advised. While some changes might seem favourable for the short term, they could have far-reaching repercussions later in the project. Whatever adjustments you make must not compromise on the quality of the project.
- Statutory approvals are key: Before any development is set up, there are laid down processes one must follow on the registration and the necessary approvals required for the project. These include county approvals, NEMA, WRMA, and any other relevant approvals and certifications. Whenever any of these is skipped, it places the whole development at risk of contravening the law. This might result in the demolition of the projector delays in construction, which could lead to loss of investment.
A great and high returning real-estate venture matures in the fullness of time. Although real estate needs much capital, it is important to resist the urge to take short-cuts, whether to save costs or shorten the construction period. The best developments are not those that are put up in a hurry, disregarding expert advice and processes. Always remember that the construction process should never be an emergency.