Entrepreneurship is a journey that requires the determination to accomplish revolutionary goals while solving problems. Joining us to share his journey is Ibrahim Aden, an entrepreneur in real estate development, concentrating on multi-family, short-stay rentals and student accommodation. He has been in the real estate industry for 8 years, with experience in both successful and failed projects gaining immense knowledge.
Take us through your journey.
I graduated from the University of Nairobi with a Bachelor’s Degree in Economics and Statistics with a dream of working with the World Bank or KNBS, but chance ended up in the field of Real Estate development. I first started out with an internship at a Shell Petrol station doing bookkeeping, and that’s where I learnt my first lesson in entrepreneurship; to get a business mentor. My first project was the renovation of an existing petrol station, which I successfully accomplished based on the expertise gained during my internship, and in the process learnt lesson number two; trust and accountability.
The choice between employment and entrepreneurship
After graduation, I was at crossroads between choosing employment or becoming an entrepreneur. What helped me get through the decision was advice from my mentors which made me realize that my main goal was to get wealthy. For me to consider myself wealthy, I need to be generating an income of at least Kshs 3 million per month. With that in mind, employment prospects were out of the picture. However, the first challenge in entrepreneurship was raising capital for my real estate development venture and at that point, I had to go back to employment. I was lucky to be taken in under the wing of an experienced real estate developer, where my first job was in storekeeping, then progressed to work in the procurement department and was eventually promoted to procurement manager. I went on to work as the underhand under the project manager and progressed again to work under the project director. The journey from storekeeping all the way to working under the project director took two years and formed me to be an all-rounded real estate developer.
How did you get your mentors? And what advice would you give to someone looking for mentors?
First define your goals, then identify the challenges you are likely to encounter and the key areas you need support on, then look for a mentor who is specialized and has more experience in the line of business you are interested in. Once you get a good mentor, be deliberate in your pursuit and humble yourself enough to learn from him/her; otherwise, you can end up turning off very compelling mentors.
Going back to your journey, what did you do next after completing your entrepreneurship lessons in project management?
First, I developed a business plan for a Kshs 250 million real estate development in Kileleshwa, and in that, I identified a piece of land suitable for the development, then identified an architect, a civil engineer, mechanical, electrical and plumbing (MEP) specialist, a quantity surveyor to quantify the project costs. Every business has its own key requirements and that is what should be defined in the business plan. To get all the real estate consultants named above, one will be required to put in at least 10% to 14% of the project costs, which poses the main challenge. To raise the capital required to kick start the project, I identified individuals who had been successfully funding real estate ventures, pitched my business plan and explained how the venture would generate returns and included a track record on my previous work. I did not succeed at raising the cash, but I leveraged my communication skills and got the consultants to accept payment in the form of housing units from the prospective project. In the next step, I approached the landowner for a joint venture partnership, and surprisingly he agreed to it.
After bringing the team of consultants and the landowner together, how did you go about raising funds to complete the project?
I had a forum at Villa Rosa Kempinski hosting about 20 prospective investors and made a presentation convincing them that we had the land and all the expertise. We made a good impression and successfully got Takaful to fund the project. And that’s how we developed Everest Court in Keleleshwa, a twelve-storey apartment with 25 units in 2018.
After completing Everest Court, how did you go about progressing your brand?
Firstly, I set up a company. After completing Everest Court, the other investors from Kempinski started reaching out, connecting me with interested investors and land owners. With the company brand gaining traction, we went on to develop more projects, such as the Prime Gate Mall and Sakina Hotel in Eastleigh. In the process, I joined hands with nine other partners to complete some of the projects; although the returns were divided among the partners, the collaboration went a long way in solidifying my brand in the market.
What projects are you working on currently?
Currently, I am engaged in a hotel project in South-C and a student housing project in Park Road, Ngara. Student housing is the next big thing, and my interest in this line is to develop hostels suited to the Muslim community, such as segregating housing for young men and women. For Ngara, the project is already on track with consultants on board, only pending county approvals, which tend to drag and require facilitation fees. For the hotel project in South C, we will only be involved in the development and then hand it over to a hotel operator.
Looking back at your entrepreneurial journey, what are the top challenges that you have encountered?
The first challenge for a real estate developer is land acquisition risk, in that one cannot tell with surety whether the title deed to an identified parcel of land is clean and free of encumbrances. If not careful, you might end up putting up a project on a piece of land with unsettled disputes, resulting in losses to the developer and everyone involved in the project. The recent ruling by the Supreme Court that title deeds for fraudulently acquired land can be nullified, places the burden on real estate developers to conduct due diligence before embarking on projects, a process which can take months.
The second challenge is execution risk. Guaranteeing your partners and investors that you are going to undertake the project from the beginning to the end is quite difficult, given the issues that might arise in the course of development. The main impediment in terms of execution risk is the resolution of complaints lodged with NEMA, which may take months or even years, bringing the development process to a grounding halt. To address this challenge, I don’t sell projects off plan.
What can be done to mitigate the land acquisition risk in Kenya?
The Land Cabinet Secretary should be at the forefront of resolving issues with title deeds. Recently the Land CS implemented a digitization plan for Nairobi land titles. Despite the good intentions behind the plan, the execution was not handled well, and consequently, the records have been jumbled up, making it more difficult to conduct land searches. That is not to say that the Ministry has not done anything; it has successfully introduced allotment title numbers for apartments, also known as sectional titles. However, the Ministry of Lands should do better to formulate better policies and improve its processes, given that land is one of the largest capital we have as a country.
The government can also add value to the real estate industry by simplifying project approval processes, which by the way, earn the County government revenue in the form of approval fees. Surprisingly, the land by-laws for various areas within Nairobi ended in 2014, and the Lands Ministry only started developing the new by-laws recently, which raises a question of the validity of the approvals that have been granted since 2014. Another concern is the arbitrary nature of the approvals, where a new county regime can revoke approvals granted by previous regimes. In addition, fraudulently acquired approvals which result in substandard buildings and in the worst case, buildings collapsing, have tarnished the brand for developers in general.
As the government addresses the by-law matter, it should also consider the provision of infrastructure sufficient to meet the population density required to meet the high housing demand in Nairobi. The county should upgrade the roads and sewer lines.
As we conclude the discussion, what are your closing remarks?
I am grateful to Sharp Daily for providing a platform to share my entrepreneurial journey. I would like to nurture budding entrepreneurs in the real estate space, so don’t shy away from reaching out.
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