Professional Documents
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CROSS - SUBSIDIZATION
Mukuru Sinai Greenfield Housing Project
Challenge:
Oil pipeline people
displacement
Private Land to
be sold
Developability of
Quarry Site
Affordability
levels
Accommodating
maximum
existing residents
No Govt Support
Project Objectives
To house for the maximum number of existing residents
affected by the relocation
To develop a self-financing delivery model that is
sustainable and replicable where no subsidy is
available
To develop a model that increases housing options for
to the poorest
To provide a range of secure tenure options
To create a sustainable urban neighbourhood with a
suitable social mix and a range of facilities
Planning Parameters
Mixed tenure - Range of housing opportunities to
promote a social mix
Affordable Rent Market Rent
Affordable Sale Market Sale
GITATURU, Nairobi
Incremental Housing
(1370)
Flats
47m! Constructed to
Frame and sold
GROUND FLOOR
FIRST FLOOR
Contractor Build
SECOND FLOOR
UNITS
COST
SALES
SURPLUS/
DEFICIT
Total Units:
2,150
430
3,790
2,615
- 1,175
350
17,700
32,258
+ 14,558
1,370
1,589
2,228
+ 639
Infrastructure Costs
1.300,000
Borrowing:
FUNDING
Max Borrowing
2.5million
Facility Required
2 million
10
RESULTS
Net Present Value (NPV) For the Project
Internal Rate of Return (IRR) (Nominal terms)
32.84%
Breakeven Year
COSTS
PASS/FAIL
PASS
51,600,791
Infrastructure Costs
170,400,000
Inf Costs/unit
Trans Costs on Sale Units
PASS
Year 2
ALL PROPERTIES
Max Monthly Borrowing Req (Dev Period) Ksh
306,871,819
0.00%
P.A
MUKURU PROJECT Management
FINANCIAL
MODEL
Maintenance P.A
Total Inflated
Inflation
Rent Inflation
Compounded Rent Inflation
Year 1
-668,407,485
5.00%
0.00%
0.00%
0.00%
5.00%
5.00%
5.00%
5.00%
5.00%
10.25%
5.00%
10.25%
5.00%
15.76%
5.00%
15.76%
Year 1
2011/12
KSh
Year 2
2012/13
KSh
Year 3
2013/14
KSh
KSh
COSTS
Land Cost
Infrastructure Costs
Construction Costs
Development period Cap Interest costs
Voids - Affordable Rented Units
Voids - Market Rented Units
Transaction Costs -on outright sale reciepts
Management - All Rented
Maintenance - All Rented
Major Repairs - All Rented
Total Costs
Inflation Rate
Year 4
Year 5
Year 6
Real Weighted
Discount 0Rate
-17,564,083
0
32.84%
Self Build
0
0
0
0
0
0
0
0
0
0
0
0
0
0
5.00%
40.71%
5.00%
40.71%
Year 2
0
0
1,067,463Opening number
0
of units0
0
0
0
Aff Rented 0
0
0
0
0
Market Rent0
457,515,224
549,349,577
541,987,636
214,192,207
1,067,463Closing number
0
of units 0
189,993,167
20,281,790
(319,383,202)
152,478,282
206,550,258
189,993,167
20,281,790
NPV
51,600,791
11
2,467,300
Land/unit
PASS
32,897
32,000,000
Net Costs
48,000,000
2,467,300
16.00%
5,555
50,000
16.00%
14.75%
Floor Area/unit
47
4444
3,525
15.75%
16.00%
6%
PASS/FAIL
Void %
PASS
32.84%
PASS
Year 2
Weighted Average %
1%
0%
306,871,819
5 Year Surplus/(Deficit)
-220,998,726
-465,795
Total
Year 0
Year 1
Year 2
Year 3
75
75
75
75
75
Year 1
-668,407,485
75
Year 2
-678,945,935
75
Year 3
-349,150,523
75
Year 4 75
-17,564,083
Total Inflated
Inflation
Rent Inflation
Compounded Rent Inflation
Year 0
2010/11
0
Year 3
2013/14
0
Year 0
2010/11
KSh
Year 1
2011/12
KSh
Year 2
2012/13
KSh
Year 3
2013/14
KSh
Year 4
2014/15
KSh
REVENUE
Grant/ Other Income
Sales reciepts from Market/Aff Sale Units
Rents - Affordable Rented Units
Rents - Market Rented Units
32,000,000
106,132,022
0
0
0
701,827,859
0
0
0
748,537,893
0
0
0
404,185,374
0
0
0
21,349,253
0
0
Total Revenue
138,132,022
701,827,859
748,537,893
404,185,374
21,349,253
5.00%
15.76%
5.00%
15.76%
Year 2
2012/13
0
5.00%
5.00%
5.00%
5.00%
CASHFLOW
5.00%
10.25%
5.00%
10.25%
Year 1
2011/12
0
5.00%
0.00%
0.00%
0.00%
Sales
0
80,000,000
16.00%
51,600,791
Year 0
-106,132,022
0
May-10
75
0
0
0
0
0
0
20,209,269
0
0
0
206,550,258
0
0
37,426,895
0
0
0
152,478,282
9
Apr-11
Jan-12
Apr-10
Number of Units
16%
35,091,393
0
0
0
(319,383,202)
100
Grant Date
5.00%
14.75%
0
0
306,871,819
5,306,601
0
0
0
Jun-11
Practical Completion
16.00%
Year 7
2017/18
KSh
NPV
701,827,859
748,537,893
404,185,374
21,349,253
0
0
LONG 138,132,022
TERM ASSUMPTIONS
IRR (Nominal Terms)
% NOMINAL WEIGHTED AVERAGE COST OF CAPITAL
21.29%
Breakeven Year
88,609,800
0
0
0
0
0 borrow req
0
Max monthly
INFLATION
RATE 14,941,335
5.00%
156,301,584
0
0
0
0
183,623,333
445,432,000
450,727,300
172,830,550
0
0
REAL DISCOUNT
RATE
16%
23,673,906
53,884,849
53,833,441
21,152,388
0
0
RENTED UNITS
PROFILE
0
0
0
0
0
0 11
RESIDUAL00 VALUE MULTIPLIER
0
0
0
0
0
0
SALES PROFILE
Apr-10
15.75%
Year 4
Year 5
Year 6
Cap Int Aff Sale Comm
2014/15
2015/16
2016/17
KSh Market Sale
KSh
KSh
32,000,000
0
0
0
0
Max Monthly
Req
(Dev404,185,374
Period)
Ksh
106,132,022 Borrowing
701,827,859
748,537,893
21,349,253
47m2 unit
PASS/FAIL
PASS
51,600,791
5.00% CAPITALISED
5.00% INTEREST
5.00%
21.55%
27.63%
34.01%
Cap Interest
Land
5.00%
5.00%
5.00%
21.55% Cap Interest
27.63%Aff Rent 34.01%
4
Oct-10
6
21.29%
Year 7
0
Total Revenue
Year 3
-349,150,523
RESULTS
Net Present Value (NPV) For the Project
CASHFLOW
REVENUE
Grant/ Other Income
Sales reciepts from Market/Aff Sale Units
Rents - Affordable Rented Units
Rents - Market Rented Units
Year 2
-678,945,935
Apr-10
Year 0
-106,132,022
Apr-10
Start on site
Build rate per year
SALES PROFILE
Name
Purchase
Lag to 1st units (months)
21.29%
5.00%
16%
11
Aff Rented
Land
76,584
5%
11
5.00%
21.55%
5.00%
21.55%
COSTS
sales. Delayed sales changes
viability dramatically
Land Cost
88,609,800
0
0
Infrastructure Costs
156,301,584
14,941,335
0
Sales off Plan enhances183,623,333
viability substantially
Construction Costs
445,432,000
450,727,300
Development period Cap Interest costs
23,673,906
53,884,849
53,833,441
Design and Pricing of Units
Voids - Affordable Rented Units
0
0
0
Voids - Market Rented Units
0
0
0
Long term affordability of the
options being
presented
Transaction Costs -on outright sale reciepts
5,306,601
35,091,393
37,426,895
Management - All Rentedfor rent and sale is required. 0
0
0
Maintenance - All Rented
0
0
Level of internal subsidization0possible
Major Repairs - All Rented
0
0
0
Affordability
Unit/ Layout
Design
0
0
172,830,550
21,152,388
0
0
20,209,269
0
0
0
0
0
0
0
0
0
1,067,463
0
0
0
214,192,207
1,067,463
189,993,167
20,281,790
189,993,167
20,281,790
(319,383,202)
152,478,282
206,550,258
Interest Rate impact sensitivity
/ negotiation
Mobilizing subsidies (land/
infrastructure/ entitlements)
51,600,791
12
Legal Structure
Project Management
Development Finance
Management
13