|Innovation pays off for Hass Consult|
|Written by Morris Aron, Business Daily, 15 October 2008|
Combining finance and real estate has pushed HassConsult to a pole position and become a launching pad that has turned many real estate investors into millionaires. Founded 18 years ago, Hass Consult has become one of the leading movers at the top end of the property market in Kenya and off shore.
Launched by Mohammed Hassanali initially as a financial consultancy firm, HassConsult now specialises in off plan residential house development and sales.
“we pioneered off-plan residential property sales in the country”‘ said Mr Hassanali.
Off-plan sales are real estate market arrangements that allow those interested in buying a house to pay a certain percentage of the total value of the property even before the actual construction begins.
To invest in an off plan sale scheme a buyer pays upfront at least 60 percent of the value of the property they intend to buy.
The land owner contributes 20 percent – mostly through the value of the land on which the property is to be constructed –while the property developer contributes the remaining 20 percent.
According to Mr Hassanali such an arrangement arrests increases in costs associated with other financing alternatives such as mortgages.
“Once a figure based on the valuation of the property is agreed on, the buyer gains as the selling price remains at the pre agreed level even as the property value goes up” said Mr. Hassanali.
This is in comparison to buying a house already built through a mortgage – where the value appreciation is minimal and the cost of financing increases in time due to the interest charged on the money borrowed.
Real Estate players say any project designed for off plan sales has to be thoroughly evaluated and analysed for prospects of value appreciation.
In general, off-plan investors tend to be picky in the kind of ventures they get into and mostly end up in niche market developments. “it is necessary to be picky as not all projects may turn out to be profitable,” said Mr Hassanali.
For this reason, Hass Consult focuses on the top end market where demand and supply is predictable and easier to evaluate.
According to Mr Hassanali the top end market also has the capital for such kinds if investment and does not have to use alternative financing options, which in the long run lead to higher construction costs.
“When individuals buy in cash – even if it is for a proion of the value of the property, a lot of inconveniences are eliminated,” said Mr Hassanali.
“Property value appreciation as the construction goes on – a win/win situation for the parties involved.”
This is the economic structure that has seen HassConsult make it to the list of Top 100 medium sized businesses in Kenya.
And although the real estate market was among those worst hit by the first quarter dip in economic activities, Mr Hassanali said the fate of the real estate industry rests on the long term economic outlook.
If the economy recovers and returns to growth, he said the real estate sector will continue to expand its share of contribution to the gross national product, even overtaking current front runners such as horticulture.