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, but nothing could have prepared him for the Covid-19 era that has depressed incomes and hurt future real estate prospects.
With essential construction materials becoming scarce, input prices have risen, creating a new challenge for future developments. To mitigate this, Mahiga Homes has adopted bulk purchasing at ex-factory prices and uses its own lorries to transport materials, reducing operational costs and helping retain unit prices during the contract period.
Mr. Muchoki also notes that the Covid-19 period has seen them restructure timelines for select units where owners were experiencing challenges, leading to new agreements. This was done in consensus with some of their customers, who agreed to lengthen the construction period.
"No one anticipated the Covid-19 effect on businesses would be lethal," Mr. Muchoki said. "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."
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, avoiding emerging challenges that have hurt other developments.
"The future is bright," Mr. Muchoki adds, "as teenagers making up 30 per cent of Kenya's population will soon require homes for their new families. But Kenya must watch out for unscrupulous developers who sell 'hot air' to hapless Kenyans."
Mr. Muchoki advises new entrants to tread carefully when embracing joint ventures with banks and landowners, as any disagreement midway could tarnish a developer's image.
