Business plan for a Real Estate developing company in Kenya

1. 2018
SIMATON LTD
FRED
MMBOLOLO
SIMATON LTD BUSINESS
STRATEGIC PLAN

2. 1
1.0 INTRODUCTION
1.1 What the strategic planning process involves step
by step.
2.0 EXECUTIVE SUMMARY
3.0 MISSION STATEMENT
4.0 ORGANIZATIONAL CHART PROPOSAL
5.0 Swot Analysis
6.0 Pest Analysis
7.0 STRATEGIC GOALS AND OBJECTIVES
8.0 KEY PERFORMANCE INDICATORS
9.0 PRICING
10.0 CONCLUSIONS

3. 2
1.0 Introduction
Strategic planning is one of the most challenging – and exciting – exercises Simaton Ltd
intends to undertake. Strategic planning will allow Simaton Ltd to make fundamental
decisions or choices by taking a long-range view of what it hopes to accomplish and
how it will do so. This strategic plan is built on an anticipated analysis of the
organization’s proposed future organogram, corporate governance and ethics, staff,
program or service mix, collaborations, and resources (financial, human, technical, and
material).
1.1 What the strategic planningprocess involves step by step.
This process may seem like an overwhelming task, yet delaying or avoiding strategic
planning means missing an opportunity to prepare for and manage change. A strategic
plan provides the framework to make quick and sound decisions, and to express those
decisions to the relevant stakeholders in a strong format.
The following cycle presents a standard approach to Simaton Ltd strategic planning. It is
not inflexible, but assists to demonstrate the key elements of strategy formation and
implementation.

4. 3
Management will prepare the majority of input into stages 2, 3 and 4 of the Strategy and
Business Planning Cycle. These inputs include analysis of the organisation’s current
position (internal analysis); an audit of the organisation’s external and industry
environment, including its competitors; discussion papers on different scenarios for the
industry’s future; and discussion papers on alternative strategies that could be followed.
In Simaton Ltd articulates these inputs and analysis and the SWOT analysis and
PESTEL analysis are used to gather together the information. A range of tools are
provided to assist with this analysis.
2.0 Executive Summary
SERVICES PROVIDED
Since Simaton’s establishment, the company intends to grow to comprise all the major
subdivisions of Real Estate, from new property developments to selling, renting and
managing property and also recently valuations and appraisals.
Our concentration has been largely in the residential market and within this sector; we
have worked mainly in the mid-to-top end of the market. Our areas of operation have
been confined to the up-market suburbs of Nairobi.
Outside Nairobi, we are fairly active at the Coast where we have concentrated on
residential developments on the North Coast of Mombasa, the gateway to Kenya and
Kilifi, a world famous tourist destination.
The client base hence comprises the mid to high income bracket encompassing the
local, regional and expatriate market. The client portfolio of Simaton in line with this
strategic plan will consistently expand to include all professional and international firms,
foreign embassies, non-governmental and non-profit organizations, small business
owners, real estate investors and first-time home buyers.
3.0 Mission Statement
"We uphold the highest standards of Real Estate competence, truthfulness and
reliability whilst providing the first class real estate service to our community and strive
to provide a progressive and remarkable experience for all our customers, creating
reliable customers for the business. We take the worry out of managing the real estate
assets on your behalf.

5. 4
4.0 Simaton Ltd Organizational Chart-A Real Estate Company
A future proposal

6. 5
5.0 SWOT analysis for Simaton Ltd-A Real Estate Company
An over-view
SWOT analysis provides a structure for analysing either your own strengths and weaknesses,and the opportunities
and threats you face, or in a work context for analysing the strengths,weaknesses,opportunities and threats a
business orevent faces. Ideally it is one step in a process which helps you to
1. appreciate the strengths ofa situation, and you may then decide to build on these;
2. define the weaknesses,which you might choose to minimise;
3. make the most of the opportunities that present themselves, and
4. recognise the possible threats and treat them in a planned and organised way.
SWOT analyses are not ends in themselves but a step before some action planning.
SWOT analyses usually benefit from discussion,get other people’s perspectives.Remember to be realistic and
focused on what really happens.
In a SWOT analysis you want to note issues underthe four headings.If you are new to the process the following
questions may be helpful prompts to your thinking.
Strengths: What are your personalstrengths? What does the company do well?
What do you do well? What is the good track record?
What do other people see as your strengths? Where does the organisation compete well?
Weaknesses: What can be developed What could you improve?
What is working less optimally than you wish? What is being done badly?
What is the competition doing better? What should you avoid doing?
Opportunities: If there were no constraints what would you like to do?
What might be possible? What will happen in the next few years?
Where do you / your organisation want to be in five years time?
Who might you want to work with? What could be a win – win situation?
How may new technologies change your practices?
What financial / govenmental / legislative changes can benefit you in the near future?
Threats: What are the barriers to your development? What sort of obstacles do you face?
Who else might move in a take over your tasks / job / business?
What are rival organisations doing? Can you fund the short and long term?
Will new technologies / developments change you roles?
What change is coming?

7. 6
5.1 SWOT analysis for Simaton Ltd-A Real Estate Company.
Strengths
The Directors well known in the public
domain and are able to steer the company
into greater heights
It is an investment asset that increases in
value over time.
It is less volatile (risky) than other
investment assets particularly equities.
The owner of a real estate asset has full
rights over the asset and can add value to
it through refurbishment and good
management.
It is used to hedge inflation risk and is a
good store of wealth.
Preferred collateral/security by financial
institutions.
There is no single market for real estate
i.e. it can be traded at auctions or open
markets by estate agents and surveyors.
Weaknesses
Expertise and Skills: No previous
experience in Property Management and
lack of experienced personnel in
development of properties
No brand image and reputation: This will
take a while to build on and later increase
the clientele as properties are highly
illiquid asset.
Ownership rights cannot be easily
transferred.
It requires a large capital to invest in
developing own properties.
Opportunities
Political goodwill and global demand for
real estate is strong and high.
Increased demand for land services hence
Real estate is poised for rapid growth. Can
earn agency fees for development of
properties and management fees for
property management on behalf of its
clientele
Rising middle class population has
resulted in the increasing demand for
residential housing complexes, commercial
Threats
Political risks and slow business reforms
coupled with slow growth rates
Rising inflation rates leading to banks
increasing lending rates could hamper the
buying and repayment capacity of the
middle class population i.e economic
slowdown may affect demand in the
periods of recession.
Competition from other investment asset
classes such as equities and bonds.
Conflicts in land use patterns and vested

8. 7
developments and townships.
New sectors offer great potential i.e.
student accommodation & care homes.
Being the gateway to East Africa, interests
has been shown by Multinational
companies in the Nairobi region will lead to
other International and local companies
opening operations in the Country
interests on land and Insecurity of land
tenures.
Illegal and irregular land allocations and
double titling leading to long legal battles
and demolitions of constructed buildings.
Existence of too many statues on land
administration.

9. 8
6.0 P.E.S.T.E.L Analysis
The PEST analysis categorizes business environment influences into four main types:
Political, Economic, Social and Technological. These factors are not independent of
each other but linked. (Johnson et al, 2005)
P.E.S.T.E.L Frame work.
Source: Johnson, Scholes and Whittington (2005)

10. 9
PESTLE is used as a strategic analytical or market research tool as part of an external
analysis, giving an overview of different macro environmental factors, that an industry or
an organisation has to consider.
Jurevicius (2012) suggests processes in carrying out PESTLE analysis, to managers for
best results in their management technique:
“Step 1 – Gathering information about political, economic, social, technological and
other pressing factors.
Step 2 – Identifying what factors exhibit opportunities or threats. By gathering
information, it is important to get as much relevant information as possible for the
external Business environment of the organisation.
The PESTLE model is used to analyse the wider environment. Some property
companies find it difficult monitoring, analysing, and responding to their external
environment accountable to a lot of different forces, both international and domestic.
The growth of globalization has made the duty of analysing the external environment
very complex. Companies find themselves operating in countries with very contrasting
histories, political and legal institutions, economic, financial, socio-cultural
environments, technological and physical infrastructure (Hamilton and Webster, 2009),
these firms need to be opened to cope with trading rules, currencies, various languages
and volatile exchange rates.
Political and tax regime
Residential
There was a decline in residential sector activity mainly attributed to the wait and see
approach adopted by risk averse investors during the electioneering period and reduced
credit supply by banks as a result of the enactment of the Banking Amendment Act
2015. During Q3’ 2017, the following activities were recorded;
 Kenya National Bureau of Statistics (KNBS) released its annual Leading
Economic Indicators Report, which showed a 16.3% decline in value of building
approvals between January and May 2017 to Kshs 105.7 bn from Kshs 126.3 bn
in the same period in 2016. The residential building approvals declined by 28.2%

11. 10
from Kshs 74.2 bn to Kshs 58.1 bn, while commercial building approvals
recording a decline of 9.3% from Kshs 52.0 bn to Kshs 47.6 bn in the same
period.
 Hass Consult released their Q2’2017 House Price Index showing a 3.1% q/q
drop in sale prices, and a 2.0% q/q drop in rental prices. Detached houses
recorded the biggest q/q price drop at 4.0%, while apartments recorded a 1.4%
q/q price drop during Q2’ 2017.
 Kenya Bankers’ Association also released their Housing Price Index for Q2’2017
highlighting a slower growth in property prices at 1.0% compared to a 1.1%
increase in Q1’2017. Apartments registered the highest rise at 1.0% compared to
prices of bungalows and Maisonettes at 0.3% and 0.4%, respectively, indicating
higher demand for more affordable units given the lower cost of construction per
unit on the developers’ side and therefore relatively lower prices for sale.
 Cytonn released the Nairobi Metropolitan Area Residential Report 2017
indicating that average prices increased by 3.8% in 2017 compared to a 7.4%
increase in 2016 while rental yields remained fairly stable averaging at 5.6% in
2017 compared to the 2016 average of 5.2%. This indicates sustained demand
for rental housing whereas demand for sale houses declined.
Kenya's rental income tax is high
Rental Income: Kenyan gross rental income earned by a nonresident individual is
subject to tax, withheld at source at 10%.
Capital Gains: No tax is levied on capital gains realized from the sale of real property.
Inheritance: There are no inheritance or gift taxes.
Residents: Residents are taxable on worldwide income at progressive rates, from 10%
to 30%.
Total transaction costs are low in Kenya
In the absence of corruption (which is virtually impossible in Kenya) the total round-trip
transactions cost would be around 4.76% to 6.76%, inclusive of the 1.25% real estate
agent’s commission.
The whole process for the titling of the property can typically be completed in around 72
days.

12. 11
Economic
Despite the softening of the market, developers are still bullish on the office market
evidenced by the following activities in the quarter aimed at increasing office space
supply in Nairobi:
 World Bank’s plans to fund construction of a USD 30 mn office complex at an
undisclosed location that will house various parastatals such as Kenya National
Highways Authority (KenHA), Kenya Urban Roads Authority (KURA), Kenya
Rural Roads Authority (KERRA), the Engineers Board of Kenya, the National
Construction Authority and the National Transport and Safety Authority. The
complex, developed by Chinese firm, AVIC, will include 350,000 square feet of
office space, a 500-seater auditorium and a service building,
 Kasarani Investments Holdings Ltd, a subsidiary of Garden City developer Actis,
announcing plans to start construction of a business park comprising of 600,000
square feet of office space, a hospital, hotel and a residential village adjacent to
the Garden City Mall along Thika Road, in November 2017.
Given that the market has an oversupply of 3.2mn square feet of office space from the
Cytonn analysis and the political environment is still heated, we expect the slowdown in
the performance of the office market to persist to the end of the year with developers
reducing development activity except in specific pockets of value such as in Grade A
offices, in sub markets like Karen and Gigiri, which still have a low supply and have
attractive returns with yields of on average 12.9% and 10.4%, respectively, serviced and
furnished offices, which are gaining trend with occupancies averaging 66.1%, and yields
averaging 13.4% and in Mixed Use Development that are likely to have higher uptakes
as a result of the live work play environment.
Social
Kenya's GDP may be growing rapidly, but so too is its population. The country has an
average population growth rate of about 2.8% annually in the past five years. As a result
its GDP per capita growth figures are quite poor. From 2012 to 2017, Kenya’s real GDP
per capita grew by just 2.5%, on average, per year. In other words, for most people real
economic progress has been very much less than the bare GDP figures would suggest.
 Currently, Kenya’s GDP per capita was estimated at US$1,677 in 2017,
according to the IMF.

13. 12
 Why has economic growth lagged? According to a World Bank report Kenya's
development has been held back by stagnating agriculture and manufacturing
industries, falling exports, and a low household savings rate that can be tapped
for investment. And of course there is rampant government corruption.
 That's why Kenya’s poverty index remains high. The country has still the highest
number of slums in Africa. In fact, almost 20 million Kenyans, about 42% of the
population, live on less than 1 dollar per day. Around 80% of all jobs are in the
low-paying, less productive informal sector.
 Kenya also has the highest rate of unemployment in East Africa, according to the
United Nations’ 2017 Human Development Index (HDI) report. Kenya’s youth
unemployment now stands at 17.6%, almost three times higher than neighboring
Uganda and Tanzania, according to the World Bank. The country has one of the
world’s highest dependency ratios at 75.4%, mainly due to the large number of
youths (children under 15 years) in every Kenyan family.
 Overall inflation slowed to 5.72% in October 2017, from 7.06% in the previous
month and 6.47% in the same period last year, according to the KNBS.
Technology
This would be the lack of quantitative knowledge on the part of the market players,
especially the professionals. The inefficient market, from the less transparency and the
level of investment liquidity in the market, there is a general hesitation of the real estate
practitioners accepting new advances in the profession.
Presently the traditional method of keeping records with hardcopy has been overtaken
by the innovation of modern technology, for example emails could be sent to Landlords
and tenants for easy access of information, properties can be viewed online before
seeing the actual property.
According to Knight Frank Africa report the technology sector is an emerging source of
office demand, the oil and gas industry and multi-national firms from the banking firms
and sectors are the key drivers of activities in some of Africa’s most active markets

14. 13
compared to India which has its technology sector being an emerging source of industry
demand.
Legal
Reforms are progressing for a legal and regulatory framework, the land laws remain
unchanged, but the real estate sector changes are yet to be felt. Following the
introduction of the National Land Commission in 2012, the laws of Kenya recommends
that the transfer of land to investors should be overseen by registered Real estate
agencies. While many investors are not able to get title deeds for their properties in
good time due to the vigorous registration processes and corruption cartels the National
Land Commission was meant to make these processes transparent and simple.
Environmental
In the country natural disasters affects the value of properties. The land reserves and
catchment areas, possible flooding from the rivers and rains has affected the value of
properties and caused tenants to migrate from such locations and at times had
commercial and residential building destroyed. The knowledge of sustainability is one
component that is part of the environment factors, but the Kenyan estate markets are
unaware and engage in a low level of sustainability practices
However the policy of sustainable development is beginning to take on form through the
Nairobi County and be obtaining further planning permission which will be used as a
force for major investments.

15. 14
7.0 Strategic goals and Objectives
In essense, Simaton will be able always to provide excellent services and go out of their
way to be very flexible. Many potential clients will be very impressed with the auxiliary
services offered by the company…’
Simaton provides a full range of real estate services, detailed as below:
PROPERTY DEVELOPMENT CONSULTANCY
Simaton will be the pioneer of off-plan sales of property in Kenya and in this respect; the
company intends to work closely with the client in the development process and provide
the crucial link between the developer and the target market, providing a complete
package to the client. We see the development from its’ initiation through to its’
completion and the work involves:
 Recommendation on nature and scope of project
 Creation of financial structure and joint venture options as well as viability studies
 Appointment and briefing of various consultants for the project
 Input and co-ordination with the design team to formulate the appropriate
concept.
 Co-ordination of the tender process for construction.
 Liaison with advocates to create required legal structure.
 Marketing and Sales service
 Monitoring of the construction process.
 Provision of financial management services
Simaton will witness tremendous success in developments of upmarket apartments,
townhouses, Villas and Office blocks most of which will be 60% to 100% sold prior to
ground-breaking.
Our reputation for attention to detail, personalized service and unique innovations in this
field has gained us strength and a niche position as development consultants. As an
over spill from the core development, we have in turn gained from re-sales, rentals of
units and property management after completion.
PROPERTY SALES AND LETTING
Giving a property the exposure it deserves to find quality tenants or to sell for the right
price requires enormous commitment. At Simaton, it intends to give the clients access

16. 15
to substantial exposure and to link a pool of high-quality tenants and buyers thus
reducing the turnover time for their properties and achieving a better price.
The work will involve:
 Designing attractive colour brochures for the property
 On site marketing via signboards, banners and the stationing of a caretaker
where applicable
 Hosting an open house scheme (where applicable)
 Media marketing through newspapers, property magazines and other
publications
 Internet marketing through our prominent website, http://www.Simaton.co.ke
 Identification and vetting of potential tenants / buyers
 Finalizing sale / rental of the property on the best terms
 Follow-through of all deals including liaison with third parties such as advocates.
Properties on our sales and rental portfolio will include undeveloped land, apartments,
maisonettes, townhouses, bungalows, industrial properties, shops and even hotels.
PROPERTY VALUATIONS
This is the most recent department of Simaton, yet to be established in the year 2019.
The company will undertake additional provisions of services like valuations of vacant
lands, residential, commercial and industrial properties, as well as businesses, hotels
and lodges.
PROPERTY MANAGEMENT
Rent collection and maintenance of a property can be a tedious task when left to an
individual owner. At Simaton, the company will offer diligent property management
services which involve:
 Prompt rent collection
 Presentation of periodic financial reports detailing all matters pertaining to the
property
 Undertaking regular and thorough inspections of the premises and providing
recommendations on maintenance or improvement programs
 Negotiating and administering maintenance and service contracts based on
competitive tendering

17. 16
 Ascertaining that necessary repairs are carried out quickly with the clients
approval under strict supervision
 Reviewing and renewing rents and tenancy conditions periodically
 Advising clients on prevailing market conditions
 Compiling reports covering all tenancy and legal matters, rent status, and arrears
if any, and contract issues.
Property Management
Why choose Simaton Ltd for property management?
Simaton Ltd Real Estate's Property Management Department has successfully assisted
clients with the leasing and management of their residential and commercial properties
for more than fifty years throughout the Adelaide Metro, Hills and greater Adelaide
areas.
Simaton Ltd's Property Management services include:
Maximising your ROI
 A small appraisal fee for leasing and management allowing you to make an
informed decision at a minimum cost.
 Maintaining a register of rent reviews and expiry dates, negotiating renewals, rent
increases and re-letting available premises. Maximising the return on your
investment.
 Advice on present performance and development potential of investment
properties. Maximising the return on your investment.
 Identifying properties that are not being used to their highest and best potential
and, where possible, increasing rental returns and capital value. We want you to
get the best return possible.
 Advice on upgrading. A small outlay may ensure better tenants, higher returns,
increased capital value and taxation benefits on repairs and depreciation.
 Providing specialised service in the sale of rental properties. We can get you the
highest possible price with no risks guaranteed.

18. 17
 There are many tax deductions applicable to investment properties, speak to us
and your accountant for more information. We will provide you with the best
possible professional advice.
Protecting Your Investment
 Stringent rental reference checks and tenant selection.
 Conducting regular inspections.
 Regular testing of smoke alarms.
 Arranging insurance claims.
Managing Rent Collection
 Preparing and arranging leases, initial inspection reports and all documentation
including special clauses to protect your investment and ensure that you are not
in breach of the Residential Tenancies Act.
 Collecting of bonds and rent. Accurate financial records kept on your behalf at all
times.
 Issuing monthly statements, showing rental collections and accounts paid.
Ensures you are kept informed.
 Direct Bank Debits for Tenant Rental Payments this minimizes embarrassments,
defaults and rent arrears.
 M-pesa Banking. Reduces bank charges and unnecessary delays because you
don't have to wait for a cheque in the post then wait for it to clear. This gives you
fast access to your money.
Property Maintenance
 Paying all statutory charges, insurance premiums and Strata Corporation levies,
if required. Just sit back and let us do the work.

19. 18
 Arranging maintenance as authorized and promptly obtaining competitive quotes.
Ensuring quality workmanship at fair prices.
 Controlling disruptive tenants, liaising with the Residential Tenancies Tribunal,
acting for clients in disputes, serving of notices, collection and disposal of bond
monies. We take the worry out of occasionally difficult situations.

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9.0 Pricing
 3% Development financing fees on new property developments
 Letting Fee: if applicable
 100% of the one month’s rent plus VAT
 Administration fees of 10% on all kinds of repair work done and miscellaneous
duties performed on the premises
 Reletting Fee: if applicable
 A third of the 100% of the one month’s rent plus VAT
 Management Fee:
 5% to 10% of the one month’s rent plus VAT
 Lease preparation charges
 Kshs 9,000.00 per household
 Late payment charges
 If rent is paid after 8th of every month, a 10% penalty is applicable for
residential houses and 3% penalty for commercial houses in accordance with
the payment terms of their contract.
 Service charge for Commercial properties is charged monthly or in some
cases quarterly.
 10% to 20% of the one month’s rent plus VAT

21. 20
10. CONCLUSION
In respect to Property and facilities management our aim in this field is to undertake the
day to day Property and Facilities management of the portfolio, ensuring smooth
operations, optimize returns to our clients, maintain the clients assets, and provide
overall sound performance to the complete satisfaction of the client.
Simaton importance is that it will bring new fashions to the market and setting the
principles for Real Estate agency practice bringing professionalism with a goal of
specialty to Kenya.
‘SIMATON RULE, talk about decent property in Kenya then you are talking to SIMATON
and when talking about experience. A very reputable real-estate with high class
properties only compared to the real estate in United States and western European
Worlds. As they say credit should be given where it is due....this is where SIMATON
intends to be in the five years strategic planning period.