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MANAGING REAL ESTATE INVESTMENT RISKS

Your Challenge
• Having the wrong Real Estate product for a particular market is one of the many risks challenges that may hinder the success of your Real Estate Investment project, and in turn frustrate you from realizing the value of your investment.

Your Solutions
• That is why it is important to develop a Feasibility Study in order to have full understanding of the operational market environment, take advantage of opportunities, and embrace acceptable levels of risks.


Essentials of a Feasibility Study for Kenya Real Estate Investments.

1. Market Research Study
• The product design should be informed by market research study on the needs, gaps, challenges, and opportunities available in the market.

2. Land-use appraisal
• Defines the feasible use of the land property in relation to the product needs of the investment.

3. Project Cost Plan
• The project cost plan should include all the input costs for the project.

4. Implementation Methodology
Implementation Methodology in a Feasibility Study is captured in two stages:

a) Construction Project Management Stage: This informs on the management of the real estate project component.
b) Operational and Property Management Stage: It informs on the management of the real estate business component.

5. Financial model
• Informs on expected Internal Rate of Return (IRR), backed by other financial viability evaluation models such a Payback period, and Equity multiple.

6. Investments Risk Management Methodology
• It outlines the methodology of how to manage the various risks (Market Risks, Quality Risks, Costs Risks, Land-Use Risks, Financial Risks, and Legal risks) established during the market study.

7. Marketing Strategy Plan
• Last but not least, the project needs to be supported by a clearly defined Marketing Strategy plan to guarantee expected revenues and returns on investment.


For more information on how to manage Real Estate Investments Risks in your investment project:

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