Covid fuels real estate scramble to repurpose vacant spaces
Harriet James @harriet86jim
A growing number of property developers have opted to halt investments in the construction of commercial and residential properties as many struggle with low returns and shrinking occupancy.
In its 2020 annual report, insurance company Britam made public its decision to stop venturing into any new property development and instead focus on property management, a move intended to lower its exposure to financial risks and improve its performance. This has been the case for many developers.
Industry reports reveal that the performance of residential and commercial properties has been affected by excess supply in the midst of low demand.
As a result of the low occupancy level and rental returns, which have in turn lead to low gains, some property developers have had to shift their focus to property management and adaptive reuse of their properties.
It is against this background that participants in the second webinar series organised by BuyRentKenya and Building Kenya titled ‘Winning in the Pandemic’, that stakeholders in real estate looked into what repurposing in real estate meant.
“In the 15 months since the pandemic broke out, we have been told to live in spaces that are well ventilated, spaces where we can isolate ourselves if we get sick or when someone has been sick, and eventually people who had the capacity, moved to start working from home,which left many company offices, commercial and retail spaces empty with little traffic and usage,” says Robyn Emerson, the author Building in Kenya and President of Women In Real Estate (WIRE).
“At first, it was all confusing, but now, we have known how things work and how we can live in our existing spaces.
We realised that we cannot stay away from these places and spaces where we do our work, where commercialist transactions transpire and we’ve began looking at how to utilise them,” she adds.
Zahiba Mawji, a property manager with Pam Golding Properties, a real estate agency believes that the pandemic has shifted attention to property management, which had been overlooked.
“More investors and property developers are looking at how to strengthen their property management strategies and how to deliver quality experience to their customers.
Its about growing that experience whether in residential, commercial of retail and keeping up with the trends,” she explains.
She gives an example of one of the residential properties they are managing where they had to build a recreational space for children during the lockdown and also upgrade their gym facility and bring in trainers as there was demand for it from the tenants.
“We wanted to deliver a property that will not just serve as a home that you are living in, but also a facility where one can enjoy spending their time in.
The property also has a beautiful garden with a gazebo where we set up beautiful furniture for people to sit and work from if they want to.
The children recreational facility also looked at the safety aspect where parents can be at ease even as their children played,” she says.
For Prit Shah, head of sales at Vaal Real Estate, they converted their Riverside Apartment project to a serviced and furnished apartment.
“We carried out research on the needs of our clients and discovered that there was a market for more space for hotel cleints who only got a single room. In a furnished apartment they have an entire house to themselves.
We turned it into one and two bedrooms furnished and serviced apartments and now we are 70 per cent sold out,” he explains.
When it comes to the latest trends during this season Zahiba believes that with creativity developers can tap into the opportunities that the pandemic has presented.
“If we look, for example, at residential properties, it is split in various sectors. There are people who lost their jobs and are looking to downsize and this can be an opportunity in the low-income housing.
We have another area where people are working from home, which will happen for a longer period and this creates an opportunity for larger living space and better amenities,” she observes.
To adapt, Pam Holdings has ensured that they have an agent in every area who researches and checks out the latest trends, which in turn informs their investment decisions.
Zahiba looks at commercial sector as another real estate opportunity with the boom of e-commerce that has made it necessary for them to set up a warehouse.
There is also Airnb vacation rentals, when it comes to hospitality. “There is a boom in domestic travel as more Kenyans demand for this kind of space.
Essential services, such as supermarkets are still moving on and now it’s up to non-essential services, such as fashion stores to see how they can employ creativity, such as using technology to give their clients a better experience,” notes Zahiba.
Baraj Kerai, project manager at Purple Dot International believes that the Kenyan real estate has been slow to adapt, especially when it comes to technology.
“This has been seen when it comes to making buildings smarter. It takes a bit of a mind shift for people to start thinking about technology as an enabling device to repurpose their space both to the investor and end user,” he explains.
However, even with the opportunities that have arisen in the commercial real estate, property developers are facing a new wave of challenges.
“We see some tenants signing in as residential, but the apartment ending up as commercial.
There are also some who rent out up the spaces for Airbnb use and this is actually is compromising the safety of residents when it comes to people coming in and out,” says Pritt.
To counter this, they are controlling the number of people coming in the property and have added a fingerprint systems to ensure that those coming in the building do not pose danger to residents.
In addition, Vaal has created a commercial space in some of their properties for coffee shops and nail parlours, which have their own entrance and parking and which they believe will be taken up quite swiftly.
“If a customer signs up for residential space they cannot turn it into a commercial space because of the walking in and out and the security of the place is jeopardised.
With the Covid-19 pandemic as well, one needs to consider health of the residents too,” says Zahiba in conclusion.
