After graduating from the University of Nairobi with a Bachelors of Arts degree in Land Economics in 1997, David Irimu landed a job with the Nairobi city council as a valuer. He worked with the Council until 2003 when he joined Metrocosmo Limited. A year later, he became the Director and is currently pursuing his Masters degree in Business Administration at the University of Nairobi. The African Executive talks to him.
A.E: What is Metrocosmo Limited?
Irimu: It is a professional Valuation and real estate consulting company.
A.E: What are your activities?
Irimu: We assess the worth of property in the market, manage and maintain property on behalf of the landlords at a fee, sell and let property, and offer consultation services on real estates.
A.E: How do you value property?
Irimu: To value any property, we use three methods: the comparable approach, where we compare the property with others that are located in the same area and use the available information to value. The income method where we put into consideration that any property that generates income has value. For instance, if someone tells me he pays Ksh.12,000 on rent, I will be able to get a rough estimate on the property’s worth even without going to the ground. Lastly, the cost method where we price all the material used in a building to come up with the value. All these methods are correlated. We use them to give an expert opinion on the worth of property.
A.E: Do you work hand in hand with other professions?
Irimu: Yes. We work with property developers who buy land and construct. We value the property and get them people to buy. We also work with quantity surveyors who do the costing before construction commences; banks who consult valuers to know the value of the property before they can give mortgages and lawyers who are always present if agreements have to be signed, among others. Some tenants prefer a lawyer to deal with the valuer or agent on their behalf. Other than these, when letting property, we work with maintenance engineers, security companies, and cleaning firms among others.
A.E: Do you have branches in Kenya?
Irimu: Our head office is in Nairobi. We have other offices in Mombasa, Eldoret and Nakuru. The reason behind this is to minimize disbursement costs. For example, assuming we did not have the Mombasa office and had a client who wanted his property in Mombasa valued, what would happen? The client would have to pay for my transport, accommodation and meals among other costs.
We do not have offices in other countries yet. However, we have been partnering with Proper Consult Tanzania Limited since early last year. This year, there was a tender for management of Parastatal Pension Fund from Tanzania. We went for it jointly with Proper Consult and got it.
A.E: Is the Real Estate field flooded in Tanzania?
Irimu: No, Tanzania has more potential than Kenya. The real estate market is not flooded. Again, to establish a company in Tanzania, one must be in partnership with a local company.
A.E: Why must one work with a local company?
Irimu: It is a government requirement. It is also easier for us since the local firm will provide the necessary contacts necessary to do business.
A.E: What about Uganda?
Irimu: The much we have done in this country is value property for our Kenyan clients who own property in Uganda. Once we are fully established in Tanzania, Uganda will be our next destination.
A.E: Who are your target clients?
Irimu: The upper class and the upper middle class
A.E: What about those at the bottom of the pyramid?
Irimu: We also target them in terms of property letting and management. We let and manage property sometimes worth very little.
A.E: Do you think they are a big market for your business?
Irimu: Yes. In property management what matters is volume. We gain a little from each client however little and when we add all this, it gets better. However, dealing with this type of clientele is not easy as many of them do not make payment on time and make business generally difficult
A.E: Why don’t they pay on time?
Irimu: We get a myriad of reasons but in a nutshell, they range from people who are living beyond their means, to calamities and also lack of regular income
A.E: How do you solve this problem?
Irimu: We try to vet our tenants before giving them houses and sometimes try to restrict ourselves to employed clientele as they are less problematic.
A.E: How do you outdo your competitors?
Irimu: We add value to the services we provide. For example, we provide a valuation report to the clients in a friendly language, add photos, and have recently started attaching our workings to the report. We are also very strict on rent collection and this makes us attract landlords who have had problems with tenants since we are very swift on this.
A.E: What challenges do you face?
Irimu: There are a lot of quacks in the market. This has led to most clients not trusting even the genuine valuers and estate agents. The second challenge is perishability of the product. For instance, if I am contracted to value property, the client may give me a time span of, say, one week. Due to the research that I have to carry out and reliance of records from other quarters, this may take longer and by the time I am delivering the report, it may be late and not fulfill its purpose. Thirdly, we have the challenge of property records being unavailable in the government offices. The government records are not computerized, hence tracing the records may take quite a while. A document that may take ten minutes if it was computerized, takes a week because they have to look for files manually and some are usually in the archives. Fourthly, real estate is driven by the economy; therefore, rent collection can be difficult during lean times. During the festive season, such as December clients may not be willing to purchase property. Most clients claim they will be utilizing their money in other activities such as traveling.
A.E: What should be done about this?
Irimu: The regulatory bodies should perfect their job by ensuring that valuers in the market are all qualified. In Kenya, for example, only University of Nairobi provides this course, and it admits only 30 regular students per year and they may not meet the demand. Secondly, the government needs to computerize property records. Can you imagine how much time would be saved if all this was done? As much as we try to keep our records, ownership of property keeps changing and with every new tenant/client we have to value the property and must refer to government records.
A.E: What advice would you give your clients?
Irimu: If they must fight poverty, they should try out business because in business if you try out the right business and it works, you can make profit. Conduct research, get to know what the customer really wants, and add value to your services.
A.E: Do you think you contribute to the growth of the economy in any way?
Irimu: When I get a lot of valuation requests from banks that means more money is being borrowed from the banks for investment. Don’t forget we also create employment opportunities as a company since we use security firms to guard houses, cleaning firms to clean the properties and maintenance companies among others. All these activities contribute to the growth of the economy.
A.E: What advice would you give to upcoming investors in this field?
Irimu: The sky is the limit. If you do your work professionally you will succeed as your own clients will market your work.
By Purity Njeru
Ms. Njeru is an African Executive staff writer
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