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I China Road and Bridge Corporation (CRBC) projects In E. Africa
China Road and Bridge Corporation (CRBC) projects In E. Africa
Inside look at contracts and leading infrastructure projects undertaken by the Chinese Construction behemoth in the region
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By Ben Oduor
China Road and Bridge Corporation (CRBC) is an engineering and construction company founded in 1979 in China. Its headquarters is in Beijing, China, and it is one of the biggest companies owned by the Fortune Global 500 company- China Communications Construction Company (CCCC).
The company has since establishment focused on global civil engineering and construction projects such as highways, railways, bridges, ports and tunnels in Asia, Africa, Europe and the Americas.
It has constructed landmark projects globally, including the world’s longest bridge- Danyang- Kunshan rail bridge, a 164.8 kilometre viaduct on the Beijing-Shanghai high-speed railway.
In East Africa, CRBC has won contracts and worked on a number of infrastructure projects. Some of them include:
Ports
The $398million new oil terminal at Kenya’s main Port Mombasa is among the key port projects. Awarded the contract in 2018, the company was to ensure its deliverables on terminal enables it raise the Port’s Oil handling capacity to 100,000 dead weight tonnes from the previous 20,000 tonnes. The move would enable the Port accommodate four ships at a time and handle liquefied petroleum gas (LPG), oil and petroleum, both refined and unrefined.
CRBC has also been contracted to construct berths at the Lamu Port, which is part of the multibillion shilling Lamu port, South Sudan, Ethiopia Transport Corridor (Lapsset), a landmark project expected to transform the region’s economies through jobs, trade and logistics. The project will feature ports, railways, road networks, oil pipelines, three airports, three resort cities and a refinery. On the other hand, following successful feasibility studies on the commercial and technical viability of the Kisumu Port, and allocation of funds for the project, the Kenyan Government contracted CRBC to work as the design-build contractor for the project. The Port was commissioned on June 1 2021 and will be implemented on a build-operate-transfer basis.
Railways
Construction of the 472 km-long Nairobi-Mombasa Standard Gauge Railway (SGR) line was done by CRBC. Designed based on the Chinese standard, with the 1435mm standard gauge, top speed of freight car (80km/h) and of passenger car (120km/h) and 33 stations lined up from Nairobi to Mombasa, the US$3.6billion project is Kenya’s most expensive infrastructure project since independence.
But, according to CRBC, it is the first landmark project after China and Kenya established the comprehensive and cooperative partnership, and also the first project of China-Africa cooperation on Three Networks of Africa’s infrastructure and Industrialization.
“It is a leading project of Kenya port-railway transport and trade integration, and also a leading project of China-Kenya capacity cooperation,” the company notes. CRBC’s holding company, CCCC is contracted to operate the line for its first five years.
The other contract awarded to CRBC by the Kenyan government after completion of the Nairobi-Mombasa SGR (phase 1) project is the extension of the railway line from Nairobi to Naivasha. The project was completed in October 2019, extending the line’s length to an estimated 578.8km.
In May this year, Uganda signed a Sh5billion deal with CRBC to link Kampala with the Kenyan Standard Gauge Railway. The project’s intention is to revamp the metre-gauge railway line from Malaba to Kampala, which will be linked to the SGR through the Naivasha to Malaba railway line. The Chinese firm has promised to complete the project in one year.
Roads
Since 1974, CRBC has constructed more than 30 major construction projects in Rwanda. These include; the Kigali-Ruhengeri Road Construction; Gitarama-Ngororero Road Construction; Ngororero-Mukamira Road Construction; Kigali Urban Road Upgrading Project; Multinational Road Construction Crete Congo/Nile Lot 3; Kivu Belt Road Construction Lot4&5; Bugarama-Cimerwa Road Project; Resurfacing works of Aircraft movement area at Kamenbe International Airport, among many other projects.
High quality and competitive budget evaluations by CRBC has earned the company trust among the projects’ financial partners, who include: KfW (the German state-owned investment and development Bank), Asian Development Bank (ADB), International Development Association (IDA), Arabic Bank for Economic Development in Africa (BADEA), World Bank and Export-Import Bank of China (Exim Bank).
For instance, Kigali Urban Roads Upgrading Project, which includes upgrading works of Kigali Urban roads totaling 54.4kilometres was awarded to CRBC, under supervision of HYCOGEC, and was to be undertaken from 7th February 2017 to 7th September 2019.
Consisting of rehabilitating and widening of the existing pavement, upgrading of the existing gravel/earth road to asphalt finish surface standard, construction of the new bridges and box culverts, improvement of the road drainage on key city roads and roundabouts, attracted an award to CRBC from Kigali City Council for “distinguished contribution to the beautification of Kigali City.” The project is financed by Exim Bank and Rwanda Government at a cost of 64,859,422,225 Rwf.
In Kenya, major road projects undertaken by CRBC are the Nairobi Southern Bypass and the Nairobi Northern Bypass. Contracted to the Chinese firm in June 2012 by Kenya National Highways Authority (KENHA) at an estimated cost of US$180million and completed in November 2016, the Nairobi Southern Bypass (approximately 29.6km) is a four-lane dual carriageway intended to relieve traffic congestion in the capital’s central business district.
It diverts long distance traffic from and to the port city of Mombasa, destined for western Kenya and the landlocked countries of Uganda, Rwanda, Burundi, South Sudan and the eastern parts of DRC.
Nairobi Northern Bypass, on the other hand, is a four bypass highways that connects the neighbourhood of Ruaka to the neighbouhood of Ruiru, both in Nairobi County. The 16km road was built to direct motorized traffic away from the central business district of the city of Nairobi to alleviate the perennial traffic jams in the city. Together with the Eastern Bypass, the projects were funded at a cost of US$85million.
CRBC is also associated with the A109 National Road, the main road between
Property developer with a turnaround strategy
Home Afrika is charting a course towards meeting the homebuying demand as it seeks to capitalize on the rapidly growing and changing population.
By Brian Tirok
Lately, investments in real estate have become popular throughout the world, with annual sales revenue resulting into millions of dollars.
In East Africa, for instance, real estate boom has literally transformed the face of the region’s construction industry, buoyed by the demand from a growing middle class, innovativeness and sustained economic growth.
The buzz of activity, and increasing demand, has skyrocketed property prices, with more concentration placed on high-end assets with the belief that they deliver high margins and returns.
Surprisingly, this may not be the case, going by industry statistics and reports, which points to a worrying trend that could affect demand and supply and ultimately create an impact to credit access, real estate growth and decline in property sales.
Market shocks
According to the Kenya Bankers Association’s Housing Market Index for the second quarter of 2019, house prices recorded further declines between April and June mainly due to a weakening purchasing power among prospective buyers.
“The KBA Housing Price Index indicated a 1.72 per cent decline in the change of house prices during the second quarter compared to 2.78 per cent decline in the previous quarter,” the report reads in part.
On the other hand, the Kenya National Bureau of Statistics (KNBS) data covering the third quarter ended September 2018 shows that real estate recorded the slowest growth (of 5.8 percent) since the last record of 5.4 percent in 2014.
One of the key real estate players in Kenya, Home Afrika, is one of the firms that have felt the brunt of the market in recent times, as its financials going declining since 2014.
The property developer, which was the first to list at the Growth and Enterprise Market Segment (GEMS) in the Nairobi Securities Exchange in 2013 with an introductory share price of Sh12 at a time it was valued at more than Sh10 billion, has since seen its shares drop and ultimately reduce in value to Ksh4billion.
The firm’s latest financial statements for the year ended December 31, 2018 indicated that losses widened to Sh346 million from Sh181 million in the previous period. Revenues dipped by 59 per cent from Sh263 million in 2017 to Sh109 million in 2018.
Strangely, with such
damning results, the company’s Managing Director, Dan Awendo, is unperturbed. Siting on the rooftop of his office located at Morning Side Office Park building in Ngong Road, Nairobi, Awendo visualises positive turnaround even during such times of adversity “We have a peculiar way of reporting our finan-
cials. Remember real estate development is a long term engagement. If you are going to construct a building, it will take you at least 3 years from start to end. For the first 1 to 2 years you are likely to show losses only because you are still building and investing. This is the case for Home Afrika,” he says.
The company develops and sells commercial and residential buildings. The properties are at various stages of development- others are already complete and ready for occupation.
Awendo points out that being the only real estate company listed on the NSE, focussing purely on real estate development is very difficult for the market and analysts generally compare their results with other companies within the stock exchange because they are a long-term investment business.
“One of our projects- Migaa, a 774-acre golf estate, is a 7-10 year project. The expectations is that within the first few years of operations, we will not show profits because we continue to ensure that we are adding value to that particular project,” he says.
With the NSE valuation, the CEO explains, sometimes there is very little correlation between the value of the share of the stock exchange and the value of the balance sheet.
“There tends to be a 10 per cent representation of the actual value of the company. This could be because it has taken the market a long time to understand how to evaluate the accounting records of the company but also to read and understand where the value is sitting. We tend to spend a lot of time speaking about the loss that a company has made while forgetting that the actual value that the company has sits in the balance sheet.”
He observed that based on International Financial Reporting Standards (IFRS), it only allows them to recognize deposits from sales as revenue once a plot owner has completed payment, title has been processed and the project is complete.
“This means the billions we have received as sales and sales deposits are reflected as deferred income liabilities in our books thus presenting a more depressed outlook on our financial position.”
The firm saw its deferred income and deposits from sales of plots standing at Sh.2.6 billion in 2018 compared to Sh.2.3 billion in 2017. The book value of the group’s sellable land and other inventory increased from Sh. 3.6 billion in 2017 to over Sh. 3.7 billion in 2018.
“This signifies continued investment in the various projects. These investments help to improve the market value of the land as the land becomes more desirable,” Awendo notes. “We are keen on new sales, collections and restructuring of debt to improve our cash position.”
Staying afloat
Although new properties take time to settle, the company is spreading its wings, a move that is expected to avert the issue of slow business and being cash strapped.
Awendo acknowledges that real estate is a long term cash hungry type of an investment and they are trying to counter this.
“What we have done is to come up with products that are shorter-term and can help us generate liquidity to keep us afloat and also meet our day to day obligations,” he says.
The firm started a smart plot business model where they move to smaller projects ranging from 30-100 acres. They do value addition on those parcels and sell them to the market. They take between 1 to 2 years, which help the company generate significant liquidity to help meet its obligations.
The firm is seeking to inject more capital to fast-track completion of projects by seeking cash from a strategic investor. The investor is expected to inject between Ksh500million to Ksh2billion, which will be directed to completion of projects at Migaa.
“That is an on-going process, we have one particular one, we are discussing with, we are hoping we will conclude with them, we continue to expand our horizon at least as far as the target strategic investors are concerned,” he says.
Properties
The company has taken an illustrious 11 years developing a bankable real estate brand. It was started by a group of friends as Chama, which pulled together architects, engineers and financial experts to develop affordable housing for low income classes.
Today, Home Afrika has become synonymous with the concept of gated living in Kenya. The company is developing large units including Migaa, a 774-acre integrated golf estate; Mitini Scapes, a premier housing development within Migaa in Kiambu County; Kikwetu, 1,000 acre middle-income housing project in Machakos and a 21 acres coral paradise of Llango in Tiwi, Kwale County.
The company also looks to record another massive milestone with the development of the 96-acre Lakeview Heights in Kisumu County.
With the Migaa project, Home Afrika is targeting the middle market clientele with their parcels of land ranging from between Ksh6 Million
Migaa Golf Estates
to Ksh14 Million in terms of pricing. Currently, Awendo notes that the Migaa project is at 47 per cent of the work that they need to do, adding that they have completed their initial housing estates within the facility and expect to do more investment in the area during the period of investment with a projection of 2 to 3 years to complete the infrastructure.
Looking at the industry, Awendo sees a lot of demand from the up market noting that there is not enough supply.
“Compared to the rest of East Africa, Kenya’s real estate is still the largest and it is very well performing compared to the other countries. But I think the performance of the economy must continue to support the growth of the sector,” he says.
Besides slow growth in the sector amid constrained credit access Awendo notes that when the economy is not performing well, unfortunately, the first sector that gets affected is the one that requires significant investment like the property sector.
“We end up in the market where people now prefer to invest in consumerism or consumer products as opposed to long term investments. This is why the smart plot business is working for us over the short term,” he says.
Looking forward, Awendo is optimistic that with the recent interest rate deregulation, they expect more credit into the market- even though it could be riskier.
The CEO is hopeful the company will have covered significant milestones by the next five years: “By then we would have finished with the issue of fundraising and the firm’s perceived valuation of the business will change dramatically so that the share price has a good representation with the balance sheet price.”
Biography
Before joining Home Afrika, Dan Awendo, an accountant and finance expert, founded and served as the CEO of Investeq Capital, a company that focuses on the unique environment of financing Small & Medium sized businesses in East Africa. Before founding Investeq Capital, Awendo was the General Manager for Loita Capital Partners and Loita Asset Management, where he was responsible for the group’s East African Corporate Finance business. His 9-year tenure at the establishment saw him grow it into one of the largest investment banking companies in Africa. Awendo’s main strength is strategy. And as a leader, he surrounds himself with people with incredible skillset that can propel him and the company to greater heights.
Real estate and Property developer Maisha Developments is constructing two modern housing projects in Kiambu County that will give true definition of exceptional living
By Ben Oduor
The 21st Century homebuyer is quite picky and particular when deciding on the kind of property to purchase. They look for specific qualities that guarantee comfort, convenience and sustainable living.
Be it the building envelop, location of the property, space, flooring, décor or major social amenities, today’s homebuyers expect satisfactory products and services.
Such demands have inspired real estate and property developers to design and construct houses that reimagine the tastes and preferences of their clients. One such visionary developer is Maisha Developments, a real estate company associated with design and development of major landmark properties across Nairobi.
Breaking ground
The company’s main focus this time is to create cosy ambiance at the outskirts of Nairobi, in Kiambu County, within the Tilisi master planned development zone, an environment that is away from the hustle and bustles of the city.
On 29th June, Maisha Developments broke ground for the construction of some 259 apartments, a fifth of which had already been sold off even before construction started. The ground breaking ceremony was announced at a time many property developers were announcing suspension of their projects due to the devastating effects of the coronavirus.
The two- and three-bedroom apartments will be completed within two years as phase one of apartment schemes Maisha Mapya and Maisha Makao that will offer nearly 600 apartments on completion.
“These two schemes offer a new level of value for firsttime and more established buyers, with apartments that start at just Sh4.4m, but come with gardens, swimming pools, gyms, sports courts, club houses, convenience shops and private parking spaces. These kinds of features are never normally available in apartments in that price range,” said Mr. Kavit Shah, CEO of Maisha Developments.
The apartments also offer a low-cost way into the Tilisi development itself, which is characterised by parks and green spaces, jogging and cycling circuits, as well as a school, shopping mall, and many acres of stand-alone villas, all set beside the junction of Waiyaki Way and the Southern Bypass.
“Covid has certainly hit buying power, but whenever real estate demand dips it is
the least attractive property that ends up unsold in a thinner market. Exceptional offers, which, for instance, deliver larger and better-quality apartments or provide a serene and spacious setting with strong infrastructure, continue to attract buyers by presenting unusual buying opportunities,” said Mr. Shah.
The current pandemic has also favoured outer Nairobi as more people have moved to working from home or working fewer days in offices, increasing the appeal of the lower costs and greater space beside the city’s ring roads.
The Maisha schemes are set over 10 acres within Tilisi and are just the latest of a series of highly successful projects launched at Tilisi after ALP West, grade A warehouses by African Logistics Properties and Tilisi Views, luxury villas by Tilisi Developments. “The key to success in real estate remains the creation of properties that give buyers a different and better lifestyle at the best possible price point,” said Mr Shah.
In order to aid speed and quality, Maisha Developments is also using front-end technology for the build, with the apartments built using aluminium foamwork that remain relatively new in Kenyan construction, but which are now amongst the leading building technologies in developed markets and a key element in the green building movement.
Maisha Mapya and Maisha Makao Schemes
The projects are undertaken under two schemes- Maisha Mapya and Maisha Makao.
According to the company, Maisha Mapya is ideal for those for those looking to start a new phase of their life or make their first step on the property ladder. The development has been designed with thought and precision so the apartments are compact, yet comfortable. High quality and classy interior and exterior finishes have been selected.
“Mapya’s two bedroom unit gives owners a great entry point in property ownership. This unit is a great set up for a working professional or a young family. The layout is simple yet functional, with two bedrooms sharing a bathroom,” it notes. The prices start from Ksh4.4 million.
Maisha Makao, on the other hand, has been designed for the established and professional individual or family. The development, the company explains, offers generous and fluid living areas with high end, well designed finishes giving an aesthetic rarely found at this price point.
“Makao’s two bedroom unit is well suited for smaller families who want a superb aesthetic or those looking to invest and benefit from an attractive rental yield,” it states. Prices starts from Ksh6.9million.
Maisha Makao also has three bedroom units, which are designed for more established families with children- with spacious rooms and an added utility room. Prices starts from Ksh9.3million.
According to Mr. Kavit, buyers are assured of the value for their money. And what they pre-order is what is delivered upon completion of project.
“There are specs depicting the exact features of the units, including the exterior and interior components. This gives our clients confidence that what they are buying is what they will eventually get. We believe in offering the best, at very manageable costs,” the CEO says.
