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South East Commercial Park is located within Nairobi CBD and has over 140 plots available for sale to developers. These are the only plots for sale available in Nairobi CBD so it gives a great opportunity for a chance to own land and develop commercial property in Nairobi CBD.

Below is a Feasibility study for a Hotel Development project showing Return on Investment of approximately 1 year.

Project: Hotel Development in Kenya, Nairobi-CBD-South East Commercial Park.

Client: Mr. J M

Location: Nairobi CBD South East Commercial Park.

MAY 2010


This is a project proposal for the construction of a middle class Hotel on a parcel of land situated at Nairobi CBD South East Commercial Park.

The project has been conceived, designed and will be implemented by for Mr. J. M

The estimated development cost for the project is KES 355,500,000[USD 4,443,750].

The project completion period shall take 12 months from ground breaking to hand over.

Return on Investment shall be in a period of 1 year.

Total gross anticipated income per annum including food and beverage sales =388,800,000.00[4,860,000.00]


A4architect is a dynamic property consulting company specializing in providing a one-stop service for the management and development of a variety of property development projects. It provides its clients, who may be property owners, developers or tenants, with the expertise to guide a project through the complex development process from concept through to building completion.

Depending on the requirements of their client, A4architect can provide a full or partial consulting service. The company’s involvement can vary from sourcing suitable sites, arranging local authority approvals, managing the professional team or providing a complete project management service.

The principals behind the firm have several years experience in designing and managing to completion several projects of various natures as part of design and implementation teams for leading Project Management firms in Kenya as well as the Government of the Republic of Kenya.


The project comprises the construction of residential units for at South East Commercial Park, Nairobi on a subdivision measuring just about 0.25 acres.

The overall theme of the development would be one of maximizing on the plot use whilst maintaining reasonable individual privacy for occupants. The selection of the type and size of units to be erected as well as their layout has been done with the foregoing being foremost -A scenario where the property is developed to target the middle income bracket.


In order to ease the impact of the overall cost of the development it is proposed to carry out the construction in phases to be jointly agreed on with the client. The project can be phased in terms of vertical floor levels per floor as agreed with the client.

In order to enable planning of major infrastructural requirements such as water storage and soil water disposal right from the outset, a master plan of the entire development shall be evolved. Thus the capacity of some of the facilities may initially exceed the needs of the accommodation provided, but this would be done with the full knowledge that the development will grow to fully utilize the facilities provided.

Auxiliary features would include paved driveways and parking, extra water storage and planted landscaped gardens. The country ambience would further be enhanced by having strategically planted trees which would serve the added role of acting as wind breaks.


The development budget is as follows:

80 No. self-contained accommodation rooms per floor for 5 No. Floors=400 No. Accommodation rooms.

Cost of construction per room fully furnished=KES 40,000 per square meter.

Area for each unit =16m2.

Total cost of construction for 400units = KES 256,000,000[USD 3,200,000]

Cost of construction for Restaurant, Kitchen, Laundry and Offices=






Total =160m2.

Total estimated cost of construction = KES 355,500,000[USD 4,443,750]

1.00 Building details

1.10 Type of unit :middle class hotel units.

1.11 Number of floors :5

1.12 Number of units in each floor :40

1.13 Gross floor area per Unit m2: 16

1.14 Building Cost per m2-fully furnished :40,000

1.15 Building cost per unit :KES 640,000 [USD 8,000]

1.16 Overall building cost : KES 260,000,000[USD 3,250,000]

2.00 Construction cost

2.10 Preliminaries      6,500,000.00   [USD 81,250]          2.5% of item 1.16

2.11 Building works  KES 260,000,000[USD 3,250,000]

2.12 Infrastructure      39,000,000.00  [USD 487,500]          15.00% of item 1.16

2.13 Subtotal – Construction cost 305,500,000.00 [USD 3,818,750]

3.00 Incidental costs

3.10 Professional fees 26,000,000.00[USD 325,000]    10.00% of item 1.16

3.12 Land Cost- [0.25 acres]  KES 50,000,000.00 [ USD 625,000]

OVERALL PROJECT COST 305,500,000.00 + 50,000,000= KES 355,500,000[USD 4,443,750]


1.10  Accomodation Units

1.11 Projected  price/unit per day KES 2,500 [USD 31.25]

Occupancy rate-90%

1.12 Overall room sales revenue per month=KES 27,000,000[USD 337,500]

1.13 Gross anticipated income per annum[room sales] =KES 324,000,000[USD 4,050,000]


1.14 Return on Investment/Repayment period= Approx. 1 year.


South East Commercial Park is a new extension of Nairobi CBD and  is situated within Nairobi’s Central Business District along LANDHIES Road. The South East commercial park is served by an all weather road with the site of the proposed construction being found 15 kilometers from the Jomo Kenyatta International Airport.

South East Commercial Park is connected to the mains water supply from the Nairobi City Council and also has easily connected electricity supply.

The immediate locality consists of subdivisions each measuring an eighth an acre. Developments in this area are commercial in nature. The majority of the buildings here are well constructed and maintained.


Given the proximity of the site to Nairobi’s CBD as well as the good communication available, the site would realize good returns on a hotel development.

The site is located 15 km from an International airport and is opposite the largest bus park in East Africa.

The planned development intends to maximize this potential by creating accommodation that is spacious whilst at the same time making optimum use of the space available.

Currently, most Hotels in Nairobi CBD experience a near 100% occupancy rate on a daily basis. The planned development would thus meet an existing need.


In the locality of the planned development, there are no hotels which cater for the middle class. The closest competition perhaps comes from the low cost hotels in Gikomba area. These are however not impressive in terms of the room sizes and quality of service offered.


It is planned to start marketing the development even as the construction begins.

The room sale price for each unit has been set at KES 2,500[31.25USD]. This is the average charged by comparable hotels such as Kahama hotel in Ngara and Blue Hut hotel along Park road. The price is justified by the upgraded quality of the planned development in terms of finishes, design, and quality of service.


A4architect will in this provide the client with a full design/build service. This shall include

1. Design and specification

Architectural, structural, mechanical and electrical drawings shall be prepared and necessary approvals sought.

During the various stages of the design, the client shall be kept fully informed and client approval sought prior to proceeding to the next stage. The engineering design shall be done by registered engineers under the guidance of A4architect. Detailed specifications shall be developed with close consultation with the client.

2. Project estimates

Subsequent to completion of the design, a firm estimate shall be done for the project

3. Preparation of tender and contract documents

After final design has been done and client approval obtained, tender documents shall be drawn up for the general and specialist contractors. The specialist contract documents shall be prepared with guidance from the relevant engineers.

4. Tendering

Selected contractors shall be invited to tender for the various work packages. We shall then analyze the tenders returned and forward our recommendation to the client.

5. Contract documentation

With the contractors have been selected, we shall draw up the required contract documents and enter into contract with the contractors on the client’s behalf.

6. Project management

Subsequent to the contracts being signed and mobilization to the site, we shall provide superintendence and project management. This will entail ensuring that the project is brought in on time and under budget by constant monitoring of operations on site and remedying any issues that may prevent timely completion or cause expenditure to exceed the budget.

7. Contract administration

We shall handle all matters relating to the various contracts including but not limited to stage payments, performance bonds, extensions of time and relationships between the various traded involved in the project’s execution.

8. Sales and marketing

In conjunction with an estate agency approved by the client, we shall produce a presentation package to be used in the sales and marketing of the units.


a) Design to Tender

The design to tender process will take a total of 2 months. This will include commissioning of all engineering design, preparation of bills of quantities and obtaining of all relevant approvals for the development.

b) Construction

Construction of the entire project is estimated to take a maximum of 10 months.


Marketing of the properties is planned to start even before ground is broken for the start of the construction. This will serve the dual purpose of creating awareness of the availability of quality hotel service and to confirm the validity of the market intelligence.

A4architect will undertake marketing through the mass media and especially through the internet using a virtual presentation kit that will include a walk through movie of the development.


Overall fees charged shall be 10% of the final contract sum. The fees shall be spread over the various stages as follows:

Fees Due



Inception and client brief

Physical survey and information review

Sketch design and basic project proposal

5% of fees.


Design and design development

Final design and presentation with budget estimates

Final specifications

Engagement of consultants and preparation of electrical, structural and mechanical services


Development approvals

30% of fees.


Pre-tender process

Preparation of tender documents for general and specialist contractors

Identification of suppliers for client supplied items to be fixed by contractors

Short listing of general and specialist contractors

10% of fees.


Tender process

Tendering for general and specialist contractors

Tender analysis

Contract award by client on advice of Project Manager

15% of fees.


Project Administration

Co-ordination meetings conducted by Project Manager

Close control of work schedule

Monitoring of quality of works and ensuring compliance with specifications

15% of fees.


Project Accounting

Budget control

Certification of stage/progress payments

10% of fees.


Project closeout

Completion inspection with client

Preparation of final account in conjunction with general and specialist contractors

Preparation of schedule of making good defects

10% of fees.


Post contract administration

Final inspection after elapse of defects liability period

Confirmation of making good defects after retention period is over

5% of fees.


100% of fees.

Notes on fees structure

1. Negotiations and any other work arising from the submission of application to the Local Authority or the submission of application to the local authority of the statutory bodies constitutes additional services to be charged for on a time basis.

2. Normalization of contract will be by the signing of both copies of a document mutually agreeable to both parties.

3. Fee notes which will be issued on completion of stage B, C & D respectively. Fee notes for stage (A), & (B) will be based on Project Estimates at those stages.

4. The payment from stages E to H will be based on the final project costs. These will be paid on a pro-rata basis as the project progresses and will be submitted immediately following the issue of certification of contractor stage payments.

5. In the event that the client selects a phased implementation of the project, fee notes for stages A, B and C shall be based on the estimated cost for the entire project while fee notes for subsequent phases shall be pro-rated to the value of the phase being implemented.

6. All fee notes will be processed, authorized and paid within ten calendar days of the fee note date.

7. Reports or opinions requiring formal client approval are to be discussed and approved within five working days of receipt of the request from the project managers by the client.

8. Disbursements resulting from the execution of the consultant’s duties including reproduction of drawings and documents, fax messages, traveling and food and accommodation expenses outside Nairobi etc. do not form part of this agreement and will be charged at cost.

Prepared By

Frank Gichuhi

+254 721 410684



Existing Traffic System


The site is served by Landhies road on one side and Railway lane on the other.

The existing road system and road reserve is not adequate to meet the traffic demand envisioned in the site. The existing traffic system will be replaced with a more comprehensive road network.

Motor Traffic

The site experiences heavy motor traffic from public service vehicles to and from the Muthurwa bus stage which increases during rush hours in the mornings and evenings.

Landhies road also has heavy traffic through out the day which peaks during early morning and evenings.

Pedestrian Traffic

The site experiences heavy pedestrian traffic along Landhies road. Pedestrian walkways along Landhies road will be enhanced. A service lane along Landhies road will be incorporated to as to serve the plots along the busy road..

The proposed developments will result to heavy pedestrian traffic within the site.

Proposed Traffic System

Motor Traffic

The envisioned developments will result in an increase in motor traffic. An elaborate road network within the site has been laid out. All developments will front a wide road and have a service lane at the back that is 6m wide.

The main entrance to the site along Landhies road is served by a 25m wide road that connects Landhies road to Railway Lane. This road provides the necessary carriageway to serve the envisioned increase in traffic and also provide adequate off-street parking and road reserve for future expansion. Approximately 190 car parks can be accommodated along this road.

Another 25m wide road has been proposed between the main entrance road and the KPLC plot-to serve the 2nd row of developments from Landhies road.

This can accommodate approximately 320 roadside car park spaces.

A 30m wide road along railway lane is proposed within the site. This can accommodate approximately 550 cars on road-side parking.

18m wide roads can accommodate approximately 500 cars in roadside angle parking.

15m wide roads can accommodate an average of 350cars in road-side parking.

12m wide roads can accommodate 360 cars in roadside parking.

6m wide roads have been proposed to act as service lanes at the back of each plot. These can accommodate 126 cars in road-side flush parking.

All these roads  will provide an estimated 2400 road-side car park spaces.

A  0.2 Ha. Plot along Railway lane near the Jogoo road roundabout has been designated for development into a parking silo.

Another 0.2 Ha. plot along Landhies road near the KPLC plot has also been ear-marked for development into a parking silo.

A combination of off-street parkings and the two parking silos will adequately cater for the increased vehicular traffic within the site.

Pedestrian Traffic

An increase in pedestrian traffic is envisioned within the site.

The proposed roads have a width of adequate space to cater for concrete pavement pedestrian walk ways on both sides of the road.

Roads and Access

Currently the site has only one inlet along Landhies road. 6 new access points have been proposed into the site along Landhies road.

Currently, the only access into the site along Railway lane is through Muthurwa Bus park.

8 new access openings have been proposed.

These access points will reduce any chances of traffic congestions at the entry and exit points during rush hours.

All developments will be serviced by the main road at the front and a 6m wide service lane at the rear.

All roads have been proposed to have a 6m wide minimum carriageway with asphaltic concrete surface treatment.

Street lights have been proposed to be installed along the roads.


Water Supply.

The site has an existing water supply from the Nairobi City Council.

The proposed developments will not be adequately catered by the existing water supply network.

A new water supply network is proposed to run along the access roads and serve each plot.

The water will be supplied by Nairobi City Council.

Foul Water Disposal

Currently the site is connected to the Nairobi City Council sewer system.

The proposed developments will not be adequately covered by the existing sewer system.

A new sewer system is proposed to run along the road reserve to serve each plot and connect to the main Nairobi City Council sewer line.

Storm Water Drainage

Currently the site is connected to the Nairobi City Council storm water drainage system.

The proposed developments will require a new storm water drainage system to be installed. This will connect to the Nairobi City Council storm water drainage system.

Electricity Supply

There is already an existing Electricity supply system from KPLC.

The proposed developments will not be adequately served by the existing power supply system. A new power supply system is proposed to serve each plot.

Electricity supply is connected to the property and is adequate to meet the demand from the proposed development.

Telephone and Internet Services

A fibre-optic underground cable supply network has been proposed to serve the  site and will  run along the roads on specially constructed ducts to serve each plot.

Solid Waste Disposal

Solid waste disposal services are proposed to be provided by the Nairobi City Council and private solid waste disposal companies.

Frank Gichuhi