How real estate firm is navigating Covid-19 crisis
With eight years’ experience delivering homes, nothing prepared Mahiga Homes chief executive Patrick Muchoki for the Covid-19 era that depressed incomes, hurting future real estate prospects.
The Covid-19 period, he says, has seen input prices rise with essential construction materials becoming scarce, creating a new challenge for future developments.
Mr Muchoki said bulk purchasing at ex-factory prices as well as use of own lorries to transport materials has helped reduce operational costs, thereby helping him retain unit prices during the contract period.
He adds that the Covid-19 period has also seen them restructure timelines for select units where owners were experiencing challenges, leading to new agreements.
CONSTRUCTION PERIOD
This, he said, followed consensus between Mahiga and some of their customers that led to lengthening of the construction period.
“No one anticipated the Covid-19 effect on businesses would be lethal. Social distancing regulations and curfews as well as lockdowns have meant bad times for most of our customers. We understand this and have accommodated their requests to extend payment period.
“In any event where one is unable to pay and is seeking a refund, we agree to sell the units to new owners where refunds are made as agreed,” he said.
With three new projects underway, with a total of 177 units, Mr Muchoki says they resolved to carry out construction works based on individual customer ability to pay the instalments.
This, he says, avoids emerging challenges that have hurt other developments that were seized by banks for non-payment of loans, hurting buyer prospects of owning homes.
“The future is bright, as teenagers making up 30 per cent of Kenya’s population and will soon require homes for their new families. But Kenya must watch out for unscrupulous developers who sell ‘hot air’ to hapless Kenyans,” he adds.
TREAD CAREFULLY
Mr Muchoki advises new entrants to tread carefully when embracing on joint ventures with banks and landowners since any disagreement midway could tarnish a developer’s image.
His strategy rides on full acquisition of land with all properties built using cash payments made by their customers. Inputs for their developments, especially stones, are sourced from own quarries while the firm also employs own builders, thereby helping them ease operational costs.
In the past two years, Mr Muchoki has completed four projects housing 60 families within Kiambu’s Kenyatta Road area and Kamulu in Nairobi while another 107 units are set for completion this year in Kiambu and Kitengela.
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