This archive report was first published on 15 June 2020.
June 15, 2020
Patrick Muchoki, CEO of Mahiga Homes, has eight years of experience delivering homes in Kenya. However, nothing could have prepared him for the Covid-19 era, which has brought unprecedented challenges to the real estate sector.
With input prices rising and essential construction materials becoming scarce, Mahiga Homes has had to adapt to the new reality. Mr. Muchoki attributes their success to bulk purchasing at ex-factory prices and using their own lorries to transport materials, which has helped reduce operational costs.
Additionally, the company has restructured timelines for select units where owners were experiencing challenges, leading to new agreements. This was made possible through consensus between Mahiga Homes and their customers, who agreed to lengthen the construction period.
Mr. Muchoki emphasized the importance of understanding the challenges faced by their customers, particularly during the Covid-19 period. He stated, "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."
When it comes to payment, Mahiga Homes has a flexible approach. Mr. Muchoki explained, "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."
With three new projects underway, totaling 177 units, Mahiga Homes has resolved to carry out construction works based on individual customer ability to pay the instalments. This approach aims to avoid emerging challenges that have hurt other developments, which were seized by banks for non-payment of loans.
Mr. Muchoki remains optimistic about the future of the real estate sector in Kenya. He noted that the country must watch out for unscrupulous developers who sell 'hot air' to hapless Kenyans. He advised new entrants to tread carefully when embracing joint ventures with banks and landowners, as any disagreement midway could tarnish a developer's image.
