The Goldilocks Problem of Housing Demand, Supply

MARCH 2021 ISSUE

INSIDE Making the Housing Finance Markets Work: Housing Finance Ecosystem: Central to a post COVID-19 resilience and recovery strategy

The Goldilocks Problem of Housing Demand, Supply Matching Housing Demand, Supply, and the Intervention The Kenya Institute of Management (KIM) is a membership based non-pro t making professional management organization committed to the pro- motion of excellence and integrity in the practice of management. JOIN KIM MEMBERSHIP TODAY

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The Kenya Institute Of Management @kimkenya.ke @kimkenya Kenya Institute Of Management www.kim.ac.ke INSIDE THIS ISSUE COVER STORY 10 The Housing Pandemic: KMRC’s Intervention SPECIAL REPORTS 10 14 Access to Affordable Mortgages for All - Wishful Thinking or an Attainable Dream?

16 Financing Property Ownership amid a Pandemic and Recession the trends you’ll be seeing everywhere this season.

18 Real Estate Investment: Best Strategy in an Economic Downturn

SPECIAL FEATURE 22 Trends Shaping the Housing Market in 2021

EXECUTIVE CHAT 26 From the Ground up: Kenya Experiencing Rail Sector Renaissance

BIG IDEA 28 Passive Real Estate Investing, What You Need To Know

30 Real Estate Could Be the Hidden Gem for Unlocking Economic Development of a Nation

SMART SOLUTION 32 Management Company Protects Your Investment: It’s That Important!

34 Benefits of using big data analytics for inclusive Real Estate

SMART LEADERSHIP 36 How to Increase Psychological Safety in the Workplace

the entrepreneur 38 Tips for Buyers and Aspiring Agents MONEY MATTERS 42 Turning Real Estate into Real Fortune

TECHNOLOGY 44 AI in Real Estate: Ways Investors can Make More Money

hEALTHY LIVING 46 How to Recognize and Address Seasonal Depression

OFFICE DIARY 48 Meetings: Work? Or just a waste of time? issue no. 090 March 2021 Management Magazine 1 Editorial Can Anyone Make AG. HEAD OF BUSINESS DEVELOPMENT, MEMBERSHIP & CORPORATE COMMUNICATIONS: Money in Real Estate? Tom Onguru ([email protected])

EDITOR: ccording to data from Forbes, more billionaires made their wealth through real estate investments than any other category - by far. Jackline Mukami ([email protected]) Buying real estate is a popular way to invest, and - if you do it SUB-EDITOR: A right - you can make some real money! You know why? Because the Derrick Vikiru ([email protected]) property is valuable. As Mark Twain put it, “Buy land. They’re not making DESIGN & PRODUCTION: it anymore.” Leonard Kibor ([email protected]) The combination of a consistent cash stream, capital appreciation, and tax breaks have however helped lay the foundation of great fortunes CONTRIBUTORS: and stable retirements. But billionaires aren’t the only people who know Ian O. Odongoh, Mercy Kambura, Goretti Kimani, Jackson Wanjala, Ivy W. Njoki, Edwin Moindi, Asiago how to invest in real estate. You can do it, too. Emmanuel, Joseph G. Muthama, Nancy Marangu, First, though, let’s answer a common question: Is Real Estate a Good Wanjiku Kimani, Esther K. Njiru, Joyce Kaduki, Robert K. Njagi, Wambui Waruingi Investment?

COVER PHOTO: Shutterstock The short answer is ‘yes’. Investing in real estate is absolutely essential for anyone looking to secure their financial future. Real estate should (Copyright Infringement not intended) be one of the core pillars of your investment portfolio for two crucial PHOTOS: reasons; One, real estate has historically generated rates of return com- Shutterstock photos, Courtesy parable to stocks and equities with much lower volatility, and two, real ADVERTISING SALES (KENYA): estate investment returns are largely not correlated with stocks or bonds. Boaz Kisero, Elizabeth Mbinya, Lawrence Opondo These two points may sound a bit academic; however, what it means for CIRCULATION ENQUIRIES you is high rates of return without the roller coaster ride of investing in [email protected] stocks. PUBLISHER Real estate investments also have a hidden benefit that we don’t nor- THE KENYA INSTITUTE OF MANAGEMENT, mally think about; illiquidity. Some investment advisors tell you that

Luther Plaza, 2nd Floor, investing in illiquid assets is bad because you might need that money

Nyerere Road/University Way Roundabout quickly. Trying to unwind a real estate investment can take a lot of time

P.O. Box 43706 - 00100 Nairobi, Kenya. and incur large financial penalties and taxes. The hidden benefit of illiquidity, however, is that it prevents us from Tel: 020 2535277 becoming our own worst enemies. Great investing requires staying in- www.management-africa.co.ke vested long-term without being swayed by the ups and downs of the stock or real estate markets. By putting up financial barriers that keep you from making decisions based on fear or greed, real estate investing lets you reap the benefits of the most powerful wealth-building tool ever imagined: compounded annual returns Most importantly, smart investing requires a thorough real estate market analysis as well as investment property analysis. With that said, however, you do not have to be a real estate expert to start investing and buying investment properties. All it takes is the right level of real estate knowledge, time, and financial resources to turn your investment properties into a money-making real estate business. Without a doubt in mind, there are many good reasons to invest in real estate today and if you are still contemplating whether or not to become The views expressed in this Magazine are the authors’ a real estate investor this year, we tell you to hurry up now. and do not necessarily reflect the views of The Kenya Institute of Management. The Editor welcomes articles from readers on subjects of interest to the Institute. Reproduction of any articles or pictures without Jackline Mukami is the Editor at Management Magazine permission is prohibited. E-mail: [email protected]

2 March 2021 Management Magazine issue no. 090 Accredited in Kenya by the TVET Authority

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issue no. 090 Kenya Institute of Management March@kimkenya 2021 Management Magazinekimkenya.ke 3 management | PERSPECTIVE How Capital Availability Will Determine the Future Real Estate Landscape

As confidence returns to real estate, the industry faces a number of fundamental shifts that will shape its future

By Muriithi Ndegwa

he Covid-19 pandemic has affected every industry, within the next few years are now speeding up their time- but perhaps none as surprisingly as the real estate. lines to make their money go further. TDespite the economic uncertainty around the world, Lowered budgets, however, are changing what some the real estate industry is going strong. Triggered by job and homebuyers are looking for, leading to growth in less ex- financial changes, the push to stay at home, and low-inter- pensive regions. Although individuals are lowering their est rates, a record number of people have bought homes personal budgets, the markets as a whole are increasing. A during the pandemic. rise in demand is actually raising home prices. According to a report by McKinsey 2020: Voices of Infrastructure – The Future of Real Estate: “With record-low Leaving Cities and High-Tax Areas interest rates, forecast price growth, and increasing rental While the growing acceptance of remote work will cer- yields, there is currently plenty of upside to property in- tainly benefit real estate markets once considered to be vestment. In other words, low mortgage rates continue to outlying suburbs or even prime vacation destinations, re- provide greater purchasing power, especially for first-time cent studies have shown that fewer workers can actually homebuyers.” However, the unique market conditions and take advantage of this lifestyle. a surge in demand from prospective buyers are combining Consequently, the oft-discussed escape from the cities to create a unique set of factors that are changing the prop- may be premature, especially if urban areas can gradual- erty investment landscape. ly reopen surviving event venues, bars, and restaurants safely. With the millennial generation increasingly reach- Changed Budgets, Higher Prices ing their prime home-buying years, they’ll certainly tell The home-buying surge comes in the middle of a finan- us their preferences in terms of location, home size, and cial strain and high unemployment numbers. According amenities in 2021, while the Generation Z tailing them will to the McKinsey report, many people are buying homes, offer insights into the potential duration of the societal they are not stretching their budgets. This goes to show changes highlighted in the past. that when paired with record-low interest rates, lower budgets can still get buyers more homes than they could The real estate boom is far from over have bought a year ago. With interest rates likely to stay Moving forward, in our view, there will be two things low throughout 2021, buyers who were thinking of buying to watch: supply and affordability. Will there be enough

4 March 2021 Management Magazine issue no. 090 A real, sustained housing recovery will be slow to build, but there are unprecedented opportunities in today’s real estate landscape; all it takes are the right tools, information and expertise to find them.

homes for those that need them, and at what price? will largely depend on the country’s ability to reign in Covid-19 served to accelerate a move toward single-family Covid-19. Only serious home sellers will be in the market home living that had started to take shape over the past as others will prefer to wait out the pandemic-related un- few years. certainties before putting their house on the market. The Much of this move is being led by Millennials, who are fiscal policies of the government and the rate at which new transitioning squarely into prime household formation inventory is added to the market will further fuel the mar- years. However, according to recent studies by Knight ket sentiment and growth. Frank, that generation is also the least wealthy at a time when the cost of homeownership continues to climb. Their Muriithi Ndegwa OGW, HSC, FKIM, Executive demand for housing is not going to diminish, but it may Director/CEO, Kenya Institute of Management. just take a little longer to make homeownership a reality. Email: [email protected] By any measure however, real estate as an asset class has boomed in recent decades. That said, the market forecast

issue no. 090 March 2021 Management Magazine 5 management | news UK-Kenya Trade Agreement threaten Regional Integration

ternal tariff is applied to imports from countries outside of the EAC. “The UK-Kenya agreement could undermine this arrangement, as Kenya would be applying a separate tariff regime to the UK,” noted the committee. In line with the UK agreement, Kenya must eliminate customs duties for a substantial number of UK goods and progressively lower and eliminate duties for many others. This difference in tariffs applied to UK goods exported to Kenya, as opposed to the he United Kingdom (UK) par- risk the agreement could serve to un- other EAC countries, could result in liament has warned that the dermine regional integration, some- increased border checks and other British government’s new bi- thing that calls into question the UK’s T barriers between Kenya and other lateral trade agreement with Kenya government commitment to support- EAC members. could undermine the East Africa ing regional integration and regional Concerns that the UK is under- Community (EAC) regional integra- trade as part of its wider international mining EAC integration comes when tion initiative. development strategy. intra-EAC trade has remained stunt- A report by parliament’s The Economic Partnership ed, marginally increasing to USD5.9 International Agreements Committee Agreement between the UK and billion in value in 2018 from USD5.7 has raised concerns over the deal, find- Kenya was signed in December last billion in 2014. On average, EAC ing that it will have disruptive politi- year and has been provisionally ap- countries source six percent of their cal and economic impacts on the EAC plied since January 1, pending the total imports from within the region trading bloc that encompasses Kenya, completion of full ratification. and supply 20 percent of their total Tanzania, Uganda, Rwanda, Burundi The agreement focuses on facilitat- exports to the region. and South Sudan. Consequently, the ing trade in goods, providing Kenya Kenya is hoping to ride on the deal UK parliament has resolved to delay with duty-free and quota-free access with the UK to grow its exports, which ratification of the agreement - initially to the UK market. Kenya, in turn, are largely agricultural produce. The scheduled for February 10 - for anoth- commits to a phased liberalization on country is the UK’s 73rd-largest trad- er three weeks to allow for a deeper trade in goods, but retains tariffs for ing partner, accounting for 0.1 percent scrutiny. some products deemed sensitive do- of total UK trade. In 2019, trade in “Kenya’s divergence from the mestically. goods and services between the UK EAC’s common external tariff could However, the decision by Kenya to and Kenya was worth USD1.9 billion. have political and economic implica- negotiate unilaterally - despite being The UK exports more goods to tions for the coherence of the EAC as a member of the EAC - has rattled the Kenya than it imports, with USD534 a regional bloc,” concluded the com- community, particularly on the appli- million worth of exports, compared to mittee. cation of the customs union protocol. USD447 million of imports in 2019. It added that although deepening According to the EAC customs union, regional integration is one of the key goods and services from the bloc do Source: The Maritime objectives of the trade deal, there is a not attract duty while a common ex- Executive

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Kenya’s real estate market is projected to record positive growth this year with young- er millennials and Gen-Z expected to play a key role in growing uptake of affordable housing units.

Mizizi Africa Homes Chief Executive Officer, George In September, Treasury Cabinet Secretary, Ukur Yatani Mburu says access to finances, among bigger barriers to en- signed into law the amended mortgage regulations requir- try for most first-time home buyers in this generation have ing pension schemes to amend their rules to allow mem- been eased significantly to favor uptake of affordable units. bers access up to 40 per cent of their savings before retire- “We exited 2020 with a number of dynamics like reduced ment for house purchases. mortgage rates, opening up pension schemes to purchase “This era of low mortgage rates and opening unlocking of properties and the new perspective of a house being a of financial access is going to offer many people greater critical factor in defense against COVID-19 pandemic. It purchasing power, especially for first-time home buyers,” has triggered many to think of investing in homes that will said Mburu. more than likely increase housing and real estate activities He adds, “There is also a unique market; that of millen- in 2021,” said Mburu. nials who are turning 30-years old, a critical period when Last year, the government instituted a number of inter- most people look to settle their families in decent housing ventions to help more Kenyans enter into the home owner- who we expect to significantly create demand.” ship journey as it races to meet its 2022 target of develop- These developments coupled with positive economic ing 500,000 units under affordable housing commitments growth sentiments from 2021, Mizizi Africa Homes say of the Big 4 Agenda. offers prospective homeowners a favorable investment en- August 2020, The Kenya Mortgage Refinance Company vironment. (KMRC) announced that banks and SACCOs will extend “The interventions by the Government offer a big relief home loans to Kenyans earning KSh. 150,000 and below at to individuals who lost their jobs or their businesses were an annual subsidized interest rate of 7 per cent compared hit hard by the pandemic,” he said. to a market rate of 11.9 per cent.

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Kenya Institute of Management @kimkenya kimkenya.ke issue no. 090 March 2021 Management Magazine 9 management | COVER STORY The Housing Pandemic: KMRC’s Intervention Mr. Johnstone Oltetia, Chief Executive Officer and Managing Director of Kenya Mortgage Refinance Company (KMRC) gives us a look at programs designed to stabilize communities and offer pathways to decent homeownership.

BY DERRICK VIKIRU

Management Magazine (MM): How would you define KMRC’s JO: We have several innovations that support the afford- mandate in the Housing sector? able housing program. One of the top innovations is the Johnston Oltetia (JO): KMRC is a non-deposit-taking pub- very existence of KMRC– in that it is the only mortgage lic-private partnership financial institution whose core refinance company in the country. Through KMRC, we mandate is to provide affordable long-term financing to provide fixed-rate, long-term financing, which has been primary mortgage lenders for purposes of increasing avail- missing in the market. In our view, that’s an innovative ar- ability of mortgage loans to Kenyans. The government has rangement as far as affordable housing is concerned. operational and regulatory authority in KMRC while the There are a couple of other innovations in affordable hous- private sector has the majority shareholding. ing from the supply side, including; improved housing designs, better building materials and more innovative tech- MM: What are the measurable benefits of helping people become niques being used in the developments. We also have inno- homeowners? vations in terms of building efficiencies within the housing JO: Housing is a basic need and it is in the interest of any value chain. You know a house has several dependencies country and its government to ensure that its people have – for instance, you cannot construct if you don’t have land. decent housing. Equally, homeownership has several eco- And you cannot claim to own land if you do not have a nomic and social externalities – meaning that once you title deed to prove it. Digitization of land records is a form own a property, you have an asset that can be leveraged of innovation since it enables efficiencies to be built around and that can provide a sense of security against potential the housing development. economic shocks. Homeownership can also be used as part of leverage to finance other discretionary and emergen- MM: What local opportunities exist which could help reduce the cies. Thus, the need for decent housing cannot be empha- costs of constructing new affordable houses (e.g., land, capacity sized. A homeowner is more likely to make investments in in the building industry, land use planning innovations)? their home that in turn, raise the property values of their JO: In the recent past, the government has come in strongly neighbors. For instance, a homeowner may be more like- to support affordable housing, and part of the opportuni- ly than a renter to paint the exterior of his or her home, ties that have resulted from this is that the government is fix a hanging gutter or remove street debris outside his or providing land for purposes of housing development. This her house. These actions may be intended entirely to im- then, creates an opportunity for immediate construction of prove the appearance of their home and in turn increase its the houses. resale value, but they also positively influence the values The private sector has also started aggregating their lands of the surrounding property. This whole aspect is known and making them available for development. Noting that as a spillover effect. Homeownership promotes economic there is a sudden significant need for housing, institutions equality. It has been argued that homeowners on average like SACCOS are now earmarking their land for develop- earn higher income and have higher savings than renters. ment. Home is an investment with proven immeasurable bene- We have also seen a scale-up of local production of materi- fits. als by SMEs. For instance, when you look at the develop- MM: How would you define innovation in affordable housing? ments that have taken place in the recent past, the materi-

10 March 2021 Management Magazine issue no. 090 management | COVER STORY

als used have been produced by local enterprises. areas. When you look at the Nairobi county government At KMRC, we are supporting development of standardiza- for instance, there have been a lot of discussions around tion of mortgage practices among the primary mortgage developing certain zones within the county including cre- lenders. This enhances competition since we provide bor- ating more parks. rowers with significantly wider choices that could create The intention is certainly to have areas where there are res- the ability to play a key role in providing practical afford- idential areas with commercial arrangements in them. It’s able housing solutions. also about balancing – like in this case scenario, ensuring that residential areas are supported with commercial facil- MM: How might (and can) Kenya, as a booming country, create ities. policies that address scarcity in affordable housing? JO: We have had policies that address the capacity in af- MM: When does affordable housing stop being affordable? How fordable housing. The most significant part is actually the does affordable homeownership deal with the appreciated value of implementation of those policies that the housing unit? address challenges that we experience. JO: At no time can affordable housing stop That said, anything that affects our being affordable. What we have in place is development certainly needs to be ad- an arrangement whereby, if you buy a home dressed. This includes the provision now with incentives from the government of land, infrastructure, provision of to the affordable housing program, then water and electricity. The government some restrictions are put in place to ensure currently provides all these – but there that you don’t maybe flip the house or sell has been discussions to have the gov- it and get profits off it. ernment support the private sector by This ensures that you do not create another providing infrastructure that will po- market within the affordable housing mar- tentially make the land ready for de- ket. You will thus not be allowed to sell a velopment. house for a couple of years after you have The government has also been creating owned it, but then after some time, that re- efficiencies in the recent past through striction is lifted and you can do whatever the issuance of title deeds for purposes you want to do with the house. Mr. Johnstone Oltetia, Chief Executive of providing or supporting the provi- Officer and Managing Director of Kenya sion of affordable housing. Mortgage Refinance Company (KMRC). MM: You already mentioned that you are tar- From our end at KMRC, providing photo|courtesy geting people in the lower income bracket, who long-term financing will certainly help are you targeting specifically? to create the need and off-take arrangements of the houses JO: Our focus is significantly more on the lower-income being developed. And that means that when you provide earners and the income threshold that we are talking about long-term, fixed-rate financing, then you create affordabil- are Kenyans who earn Kshs 0 - 150,000 per month. There ity by addressing the affordable housing demand. was a study that was done in 2019 that shows that the MM: In certain areas, zoning laws are a big impediment to above category controls about 72 percent of the working Kenya’s affordable housing program. What incentives do you population in Kenya. And this is the category that deserves have for residents of such areas for them to allow commercial and to be provided, to be incentivized, and to own houses. As residential developers or even the government to achieve addi- KMRC, we have been working with the government to en- tional development capacity for affordable housing? sure that we shift our financing to this demographic. We JO: Zoning is part of the planning that is done by govern- are currently providing loans of up to KSh.4M to people ments, either national or local governments, for the pur- in urban areas and a loan of up to KSh.3M to people out- poses of creating efficiencies around the cities. The chal- side Nairobi. Eventually, we hope that if a majority of these lenge with that is that sometimes it prohibits certain devel- people can access that financing, then they can get access opments in certain areas. to decent houses. However, as long as it has good spatial planning in it, zoning is not necessarily a bad thing. It is supposed to be sup- MM: There’s a group of people who are predominantly in the portive of the municipality developments and allows the rural areas who can be classified to be under the low-income cate- authorities to take control of the use of the land around the gory. However, you’ll find that these people already own land but they have poor housing. How do you facilitate affordable housing issue no. 090 March 2021 Management Magazine 11 management | COVER STORY

to that category of people? collateral property. JO: We have a study that shows that almost 90 percent of In this case, you take a mortgage and then issue or provide people in the rural areas own their homes – which is a very your property as collateral. The share of the appreciated large percentage. That goes to show that a majority of the value is known as a contingent interest, which is deter- low-income earners in rural areas are homeowners. mined and mainly due at the sale of the property or the At the moment, you also realize that SACCOS mainly pro- termination of the mortgage. vide incremental housing development for that category of So because of the lower rate, the monthly payment is re- people. So the focus has been to help or support people duced, making it affordable. However, this kind of saving who are outside of the main urban centers, but who none- of monthly rates comes with a trade-off. The lender will theless require housing. have to share the profit with the borrower of authority. It’s therefore a risk to the lender because the favorable trade- MM: The demand for affordable housing is huge. Is there any off depends on the conditions of the housing market. Thus strategic goal in place to close the housing gap? And how long is if the property value decreases, for example, and the house this going to take? is sold at a loss, then the contingent interest will obviously JO: We cannot predict with certainty when the demand be nil. will reduce. However, for perspective, I would say that as Nevertheless, this is a very innovative way of doing busi- of 2019, the demand for affordable housing in Kenya was ness because the lower interest rates provided contributes about two million units. That is the deficit that has been ex- to housing affordability. It is certainly a kind of arrange- isting and it keeps increasing by about 200,000 units every ment that I would recommend financial institutions to con- year. So, demand remains a very significant challenge, and sider – if they are to lower their rates than what we are cur- this is the reason why the government classified housing as rently offering with the promise to share the appreciated one of the big four agenda. mortgage value. We, therefore, need to shift the market to a situation where a majority of the people can afford homes. We have adopted MM: What are the key priorities and future of KMRC as far as strategies to address the housing deficit, both on the sup- development is concerned? ply and demand side. Policies have also been put in place JO: Per our strategy to raise additional capital and funding, to address this gap and KMRC addresses the demand side. we are on the course of issuing bonds by Q3 2021. What we We also have other institutions that address the supply side are currently focusing on is putting together the processes of affordable housing – these include the Department of that are required, for instance, hiring consultants and trans- Housing and National Housing Corporation. They have action advisers who will support the process. been more focused on supporting and developing policies We are also looking into raising more funds by mobilizing that address the supply to cater for developments. This concessional financing through the government – this is is also the reason why we have Microfinance banks and supported by its objective to continue supporting the af- SACCOS brought into the equation – so that they can for- fordable housing project. mally support affordable housing personal loans. Moving forward, KMRC will continue to build and sup- Another strategy that has been put in place is the round-up port the market to build affordable houses by providing of private developers who will support the supply of af- clear visibility on the housing demand. We will therefore fordable housing. At the end of the day, all these initiatives support the financial institutions – especially the SACCOS are meant to drive the supply of housing so that they can - to build their capacity in underwriting mortgages, some- try to match the high demand. thing that they are very new to. Above all, we will continue performing our core function MM: There is a new trend in homeownership referred to as in the development agenda which is to make sure that we “shared appreciation mortgage”. Please explain how this works create greater scope for the uptake of mortgages in the and if this arrangement can aid increased uptake of mortgages for homeownership. country. JO: A shared appreciation mortgage is where the lender agrees to interest rates lower than the prevailing market Derrick vikiru is the sub-editor, Management rate in exchange for a share of the appreciated value of the Maagazine. Email : [email protected]

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issue no. 090 Kenya Institute of Management March@kimkenya 2021 Managementkimkenya.ke Magazine 13 management | Special Report Real Estate Investment: Best Strategy in an Economic Downturn

Is real estate a good investment in a recession? Here’s how investors can decide.

By Ivy W. Njoki

hen a recession takes hold, your first instinct may be Wto do some strategizing with your portfolio. Seeking out recession-proof investments can help balance stock holdings. Rental properties can act as a natural hedge against market volatility, but is real estate a good investment in a recession? That depends on whether you’re taking the right approach. According to various studies over the rental property or you’re interested in ing an investment property in a reces- decade, real estate is more stable than purchasing more than one property to sion, the key rule is ‘don’t buy the many other investments when the create multiple income streams. house, buy the location. Specifically, economy slows down. However, it is important to note that means scouting out areas that This is because demand for rental that it’s nearly impossible to time out have stable employment bases and a properties actually goes up during a exactly when the market will hit the positive job growth outlook. recession because if homeownership bottom or the top, but if you’re mak- Job scarcity can throw a wrench in is down, then people have to live ing deals in the in-between area, there your rental income plans, so it’s im- somewhere. Assuming tenants are is money to be made. As with any oth- portant to test the economic waters able to keep up with their financial er investment, it’s important to have a before you buy. If your tenants are out obligations, a rental property could plan when incorporating rental prop- of work, they can’t pay rent and may provide a steady stream of passive erties into your portfolio and even move to areas where jobs are avail- income even when the stock market more so during a recession. There able. is down. are some unwritten rules to follow to Lifestyle is another factor to con- Recessions can also make getting help ensure that your rental property sider when choosing a location. For into the landlord business easier if investment pays off. Keep these tips example, in the recent past, areas that property values drop. So if you’re in mind: are walkable or close to downtown looking to purchase a new invest- have grown more desirable for rent- ment property, a recession means Location, Location, Location ers. If a recession doesn’t shift rent- you’re going to get that property at In evaluating rental property in- ers’ desires dramatically, investment a discounted price. That’s a plus if vestments for a recession, always get properties in those areas could prove you have limited capital to invest in a the full lay of the land. When purchas- profitable.

14 March 2021 Management Magazine issue no. 090 management | Special Report

While cash flow properties can be maintenance, repairs, property taxes Consider Cash Flow attractive, don’t overlook the need for and even your earnest money deposit Keeping cash flow in sight is anoth- cash reserves when buying a rental when buying the property must come er important rule for how to invest in investment. This is because, in a re- from the IRA to avoid triggering tax rental property during a recession. cession more than other times, there consequences. For that reason, it’s may be more of a delay between ac- important to make sure you’re plan- quiring the property and getting it to ning ahead properly if you’re consid- a position to generate income. Having ering using a self-directed IRA to buy liquid cash available can help cover a rental investment. expenses in the meantime and minimize the need to try to obtain capital Research Deals Thoroughly through a lender. A good rule of thumb for how to buy a rental property during a reces- Follow the Rules When Using sion or at any time is that if some- IRA Funds to Invest thing seems too good to be true, it Getting a loan is one option for probably is. funding a rental property purchase. In a recession, there will likely be During a recession, lenders tend to a number of owners trying to unload tighten the purse strings, making it properties that they can no longer harder to borrow. maintain or afford. While this means In that scenario, using a self-di- you could scoop up some bargains, rected individual retirement account don’t skip out on due diligence. to purchase an investment property Real estate investors should be could make sense and offer some tax on the lookout for red flags, such as advantages. That said, there are some a lack of income, poor location, tax guidelines to keep in mind. It’s im- or other liens and an obvious lack portant to remember that investing of maintenance or upkeep. Getting in real estate using your retirement a detailed inspection, checking court funds comes with some strings at- records for liens and researching Scout out areas tached; rental trends for the area can help that have stable First, the property in question you gauge an investment property’s must be an allowable investment. employment short- and long-term potential. And That includes vacant lots, raw land, bases and a if you come across what looks like single-family or multi-unit homes, a great deal, ask yourself why the positive job apartments, townhomes, condos and property is for sale to begin with. growth outlook. foreclosures. Mobile homes and time- shares, on the other hand, are generally excluded. If you want to add a rental property Next, there are regulations regard- Ivy W. Njoki is a Real Estate to your portfolio in a market down- ing the property’s use. Individual Agent and Property Manager based in turn – while still erring on the side Retirement Account (IRS) rules do not Nairobi. | [email protected] of caution – look for properties that allow you to live in or use a proper- are still cash-flowing. In other words, ty owned by your IRA. Furthermore, property that still has cash coming any improvements or repairs to the in after taking out expenses and the property can’t be made by you or by mortgage payment. Cash flow rental a company that is owned by you or properties can help to minimize risk another disqualified person. during a recessionary environment. Finally, remember that things like

issue no. 090 March 2021 Management Magazine 15 management | Special Report Financing Property Ownership amid a Pandemic and Recession Entrepreneurship plays an influential role in the economic growth and standard of living of the country.

By Joseph G. Muthama

ince early last year when ty market. imperil economic reinvigoration and Covid-19 was declared a global Indubitably, the country’s economic property ownership which has gone Spandemic by the World Health system is pure Alice in Wonderland. awry due to vagaries of international Organization, the political, social, and The Kenya National Bureau of trade. Property prices have taken a economic landscape in the world has Statistics (KNBS) January 2021’s data downward trajectory; lack of financ- changed tremendously. Specifically, indicate that, the economy contract- es when it comes to acquisition and the pandemic has left many countries ed by 1.1 per cent between July and development of property in Kenya is on the verge of economic depression September last year thus making it the the Achilles’ heel. and recession. Due to the economic second consecutive quarter of Gross and financial effects of the Covid-19 Domestic Product (GDP) shrinkage. State of Land Ownership pandemic, a majority of Kenyans Economic and financial repercus- Over the years, Kenya has expe- have been left with dismal discretion- sions occasioned by the Covid-19 rienced phenomenal population ary income. Kenya’s depressed land pandemic will have a long lasting growth. The highly volatile land pric- and housing markets speak volumes impact in property ownership and es coupled with an explosion of pop- about the ravages of the pandemic. financing. Worse still, taxes increase ulation growth have rendered many Moreover, it has created an uncertain to plug the budgetary financial defi- Kenyans landless. Paradoxically, business environment like the proper- cit was the last straw; it also might

16 March 2021 Management Magazine issue no. 090 management | Special Report

while the population continues to According to a 2011 World Bank re- The Way forward increase exponentially, the land report, the demand for housing in Kenya Despite challenging economic and mains constant. Rapid population has been growing rapidly due to pop- financial conditions, there is light growth understandably intensifies ulation growth and a high rate of ru- at the end of the tunnel. According competition for resources like real ral-to-urban migration. to Housing Finance (HF) Group Ke, estate. According to the Ministry of Little wonder that Kenya has a there are three ways in which land- Land, Kenya’s economy loses an es- housing deficit of 2 million units. The owners can obtain financing for the timated Kshs 30 billion annually due 500,000 affordable housing initiative/ development of real estate proper- to land fraud facilitated by corrupt project launched in December 2017 ties especially for commercial pur- and quack surveyors. has been hampered by poor imple- poses namely; securing finance from Despite the myriad of problems mentation and lack of public-private commercial banks, joint ventures that face real estate in Kenya, the partnerships. Simply put, developing with capital investors, and the pool- truth is that real estate investment is about 500,000 housing units by 2020 ing of resources by individual in- the only sure way to personal finan- as espoused in the affordable Housing vestors. According to a 2020 World cial stability and national economic Programme under the “Big 4 Agenda” Council of Credit Unions’ annual growth. has remained an illusion if not a night- statistical report, more than 8 million The 2015 UN General Assembly mare. This is a no-brainer. Kenyans belong to the saving and Sustainable Development Goal A 2015 survey conducted by the Credit Cooperative Organisations (SDG) number 17 seeks to strength- Kenya Bankers Association Centre (SACCOS). Apart from contributing en the means of implementation and for Research on Financial Markets to the GDP, Saccos help individu- revitalize the global partnership for and Policy shows that 80 percent of al members to save and get credit sustainable development. Certainly, aspiring homeowners were reluctant to purchase properties or bail them appreciation in the value of real to use mortgage to acquire homes in out of financial difficulties. Financial estate especially land has made it the future, citing negative issues about Sector Deeping Trust-Kenya (2009) impossible for citizens to acquire mortgages, high-interest rates which indicates that the options of home ac- land. Finding enough money for make them very expensive and out quisition are through regular income land acquisition and development of reach of some of the middle class. that is saved savings and/or through is the first hurdle. And to overcome Additionally, according to respon- credit. financial hurdle is not a walk in the dents, mortgage terms are perceived to A cut in taxes and reduction of in- park. Unfortunately, some commer- take very long before one completely terest rates can profoundly help the cial banks offer loans at extortionate owns the home. country’s property ownership and and prohibitive lending rates. And On the other hand, the building and financing. Broadly, the government last but not least, conveyance takes a construction industry has been faced needs to create a climate in which long time due to irreconcilable family with various challenges like high land businesses can prosper. With ade- members’ differences. prices, lack of legal land ownership quate financial resources; land pur- documents, lack essential infrastruc- chase or commercial or residential Affordable Housing Programme tures, high cost of building materials, properties is Midas touch. In a nut- According to the 2019 National lack of access to finance, poor pub- shell, real estate is the country’s eco- Census and Housing report, only lic-private partnership, mushrooming nomic mainstay. 14.8 million Kenyans live in urban ar- of slums and shanties, cracking or eas while 32.7million live in rural ar- sinking houses due to lack of approv- eas. The rate of urbanization growth als from the National Construction which stands at 4.23 percent has out- Authority (NCA) among others. The Joseph G. Muthama is a stripped the housing supply due to only way out of this conundrum is for business management and strate- rural-to-urban influx. Worse even, the government to build cheap quality gic management lecturer at Jomo about 30 percent of Kenyans live in and affordable houses lest we are faced Kenyatta University of Agriculture and urban areas while approximately 40 with homelessness. Technology (JKUAT), consultant, and percent live below the poverty line. author. Email: josephmuthama05@ gmail.com issue no. 090 March 2021 Management Magazine 17 management | SPECIAL REPORT Access to Affordable Mortgages for All - Wishful Thinking or an Attainable Dream?

UN-Habitat estimates that 3 billion people will need urban housing and infrastructure by 2030, meaning many of the urban poor will be in desperate need of formal housing.

By Wanjiku Kimani

drive down Nairobi’s major shows that there are around 25,000 need to look at factors such as utility roads, such as Thika Road, mortgages across the whole of Kenya, provision, overcrowding, transport Aand Waiyaki Way, or further and they contribute to less than 3% facilities, and proximity to essential afield in Naivasha, Mombasa, or even of GDP at 2.4% in 2019. This is in services like schools and commercial Kampala and Dar es Salaam, you comparison to almost 20% in South centers. cannot go a few kilometers without Africa, and 24% in Namibia. These are just some of the factors seeing billboards and roadside signs There is clearly a need for the hous- buyers look at before they consider advertising property for sale or rent. ing industry to start providing low buying a home, especially in urban Glamorous photos of well-designed finance options for potential buyers areas. UN-Habitat estimates that 3 artists’ impressions catch your eye, and this is a hurdle that is not easy billion people will need urban hous- and even if your home is quite decent, to overcome and property managers ing and infrastructure by 2030, mean- you may feel the urge to live in these and owners need to understand their ing many of the urban poor will be attractive abodes. But you are one of market. What kind of people are look- in desperate need of formal housing. the lucky few who own a home. ing to buy homes? Is there a possibil- Some ideas have been touted as solu- Most people living in Nairobi - over ity of converting renters to buyers? tions to this impending crisis, includ- 80% - rent their homes, which shows Which regions are the most popular ing; utilizing microfinance mortgag- the extent that people struggle to buy for customers? Is there an untapped es, and providing financing for infor- their own properties. A Cytonn study market in the informal sector? They mal workers.

18 March 2021 Management Magazine issue no. 090 management | SPECIAL REPORT

How Microfinance Mortgages loans of $30 - $10,000 was the best often as they live in warm, well-venti- Can Help Potential way to provide finance for people in lated spaces, and also have the oppor- Homeowners these communities. tunity to focus on studying with the Most commercial banks - if not all More often than not, poorer families additional space and comfort. 42% - only offer formal long-term mort- build homes incrementally according of microfinance lenders involved in gages to a minority of Africa’s pop- to the amount of money they have. the program said these types of loans ulation. In Kenya, only 2.4% of the They will start with semi-permanent had, on average, the same returns as total population can afford high loan structures, and progressively replace those given for business or farming rates. These are offered to urban pro- and expand them with more perma- purposes. fessionals, leaving out most of the ur- nent materials. With the loans provid- ban poor. Microfinance solutions are a ed, some made simple improvements Making Mortgages for Informal way to reach low-income households, such as adding a toilet, kitchen, or Workers a Reality especially in peri-urban areas. completing roofs while others built There are currently more than 15 One such program that proved to new homes. million Kenyans working in the in- be beneficial was the Building Assets, This form of building in stages can formal sector, mostly in the hospital- Unlocking Access by UN-Habitat that help improve the living conditions of ity industry, and as wholesale and concluded in 2019. Working in Kenya, impoverished communities, which retail traders accounting for around 9 Uganda, and Ghana, it targeted peo- has a positive effect on health, and million workers. This sector is most- ple who live on $5 - $10 per day and education. Children tend to fall ill less ly unregulated and semi-organized. their provision of small short-term Many live just above the poverty line issue no. 090 March 2021 Management Magazine 19 and do not own bank accounts or ac- repayment plans. cess to commercial financial services. .Informal workers should look Although M-Pesa has given a new into forming unions, or groups, lease to these individuals, they often that2 will make them more attractive do not meet the requirements to apply to financial institutions. Banks will for mortgage loans. Furthermore, they find it easier to deal with a cohesive do not have sufficient assets to offer as unit, rather than with individuals. collateral when requesting a loan. By educating such groups, mortgage Unfortunately, even the more institutions, the members will know skilled, professional informal work- that lending facilities are not only for ers such as plumbers, electricians, high-income earners. mechanics, tailors, technicians, and .Lenders improving the borrow- grocery-store owners have a desire ers’ access to funds by reduc- to own homes but do not qualify for ing3 the range of complex processes loans, as they do not have the required required to acquire a loan. When documentation, or have enough initial the client needs the funds, banks More often than account balances. India offers a solu- could waive the need for a deposit. not, poorer tion to these marginalized people by Additionally, housing finance loans families build offering them micro-home loans with can be offered in the form of building only basic requirements that include; materials instead of cash. Sometimes, homes incre- a bank card with the details, and a borrowers are tempted to use the mentally ac- minimum of 0.3% of the loan amount funds for other investments, such as cording to the required. If applied to Kenya, this their businesses, instead of the intend- amount of mon- would open up many more opportu- ed purpose of construction. By pro- ey they have. nities for informal workers to access viding building materials, lenders can mortgages. be sure that their loans will be used to There are some ways that the infor- build the much-needed home. mal sector be improved in terms of Although these are not concrete property ownership including; solutions to the property crisis that . Lenders re-thinking their defi- many African countries face, they nition of collateral. It is counter- can work as a step towards improv- productive1 to ask for a house as col- ing providing finance and the overall lateral when someone is trying to buy housing situation, thus allowing more or build their first house. One way to people to own their own property. overcome this hurdle is to offer short- term, repetitive loans so that once the first loan is repaid, borrowers are legi- Wanjiku Kimani is an experi- ble to receive another loan for a higher enced SEO copywriter and editor for both print and online publications. / amount - maybe 10-20% more. Banks E-mail: [email protected] and microfinance facilities need to recognise that the borrower may not have a fixed income due to fluctuation in the economy and allow for flexible

20 March 2021 Management Magazine issue no. 090 issue no. 090 March 2021 Management Magazine 21 management | Special feature Trends Shaping the Housing Market in 2021

What the Future Of Real Estate Has In Store

By Janet Ayara

he latest real estate trends are best described as a of missing out) will once again kick in and more buyers will mixture of both positive and negative develop- be keen to get in the market before it prices them out. For Tments. now, there are no indications that price growth is going to For starters, the prices of real estate property continue slow. to skyrocket, which is being driven by a variety of fac- What does this mean for buyers? If you’re going to buy tors. This, too, has been heavily affected by the COVID-19 a home in this expensive market, you absolutely must find pandemic, the ongoing economic downturn, and the out how much house you can really afford. Commit to stay- emergence of a new buyer demographic, in the form of ing within that budget amount no matter how much pres- Millennials. sure you feel watching competitors pluck good homes off According to economists and market watchers, home the market. values are growing at their fastest pace in a generation, and are showing no signs of slowing down in 2021. Buyers have to face more competition and act more quickly than usual to snag their dream home. Housing prices had already started rising before the pandemic arrived but the pandemic created a rapid acceleration in double-digits. This begs the question: How will the housing market shakeout in our current economic climate? Will we have a buyer’s housing market in 2021? Whether you’re selling, buying, or staying put, here are the 2021 real estate trends you need to know; Property demand from home buyers is growing stronger According to Zillow’s market pulse report dated February 12, 2021: “Despite the “recession we made ourselves have”, rising unemployment and many small businesses facing challenges, interest in buying residential property have skyrocketed.” While many factors affect property values, the main drivers of property price growth are consumer confidence, low-interest rates, economic growth, and a favorable supply and demand ratio. This comes particularly from owner-occupiers who have amassed household savings at levels not seen since the mid-1970s, and this is in part because they have not been able to spend their money on vacations or even entertainment as they normally would. Also, as property values increase and the media reports more positively about our property markets, FOMO (fear

22 March 2021 Management Magazine issue no. 090 management | Special feature

As far as sellers are concerned, a nice profit may be on What Lower Rates Mean for Buyers: Sure, interest rates the horizon! And that’s great news because you’ll really are low right now—which can help with affordability. Just want that extra money when buying your next home. To be careful not to let that pressure you into buying a house get the best offer for your home, work with an experienced when you are not ready. A super low-interest rate on a real estate agent who really knows your local market. And house you can’t afford is still a bad deal. be sure to wait for the right offer. Some buyers may try to What Lower Rates Mean for Sellers: If interest rates stay gut punch you with a low number. If you aren’t in a hurry low, buyers will be more motivated to buy your home to move, wait for an offer that gives you the most profit. sooner than later. But if interest rates do start to increase Remember, the less desperate person always has the up- later in the year, just plan for your house to be on the mar- per hand when negotiating. ket a little longer. If you don’t plan on moving anytime soon, you might still be able to take advantage of these su- Mortgage Interest Rates Are Still Low per-low interest rates and shorten your payment schedule According to Realtor.com, the average mortgage in- by refinancing your mortgage. terest rate has been nice and low lately. In the Country, many new homeowners during the pandemic claimed Millennials as Home Buyers that COVID-19 played a role in pushing them to purchase Millennials, believe it or not, are dominating the residen- homes. According to a report by Knight Frank released tial real estate buyers’ market. Members of this generation earlier this year, about 54 percent took advantage of the have been finding stable jobs, with more than average low mortgage rates. Another 15 percent stated that they household incomes. Most Millennials have been found to wanted to move out of locations getting hit badly by the prefer middle- and upper-middle-class homes and account outbreak. Only 26 percent answered that the outbreak did for 38 percent of the market according to an exhaustive not have an impact on them becoming a homeowner. study published by Zillow. So what should sellers do to tap into this burgeoning market? One thing for sure is to leverage the use of the Internet. Millennials are known to research online first before making purchase decisions. Sellers should also offer homes that are sustainable and have plenty of usable space. Also, consider offering properties located in bustling cities where the cost of living is more affordable. For buyers, the current market means improving communication with sellers, being straightforward with what they want in a home, and enlist the aid of a real estate professional.

People will pay a premium to be in the right neigh- borhood If Coronavirus taught us anything, it was the importance of living in the right type of property in the right neighbor- hood. In our new “Covid Normal” world, people will pay a premium for the ability to work, live and play within a 30-minute drive, bike ride or walk from home. Real estate investors and buyers have also been setting up shops in second-tier cities because of the high real estate prices in first-tier ones. Investments in these cities have increased significantly, contributing to higher real estate prices. Large companies have likewise been leaving first-tier cities, moving to second-tier locations. These capital movements are seen to result in economic growth and greater value for real estate properties in second-tier cities. issue no. 090 March 2021 Management Magazine 23 management |special feature

The influx of investments to second-tier cities is expected to more or less equalize capitalization rates in both markets, resulting in an increase in the value of real estate property in second-tier locations. As always, the law of supply and demand rules the market, with luxury home prices being driven by high inventory levels. This could prove to be good news for investors who want to cash in on luxury homes, which seem undervalued at this point.

Affordable Homes Still Needed Before the pandemic, according to a report by PWC, house rents still beat home purchases by a large margin in more than 50 percent of the housing markets in the Country. Residential real estate prices are not helping as they continue to displace wage increases in 80 percent of markets. Low housing High home prices were expected to drive demand for rental housing. inventory, buyers However, as low mortgages come into play because of the moving to the pandemic, more and more people are looking into having suburbs, con- their own homes. But as prices become higher, previous- struction and ly-owned homes are still the dominant choice in the market. renter affordability issues are likely Trends as Basis for Property Purchase to shape the What should we expect as we enter 2021 is a question at the top of most of our buyers, investors, and sellers’ minds. course of 2021 The real estate market is truly a mixed bag at this point, – Zillow taking into account the pandemic and the new normal. That said, the future of real estate will be driven by new technologies, buyer-agent relationships, and changing homeowner demographics. Real estate investors hoping to achieve success will need to learn to thrive amidst these changes. With new software to speed up closing timelines, online listing sites resulting in more informed buyers, and new-age groups entering the real estate market, the industry is transitioning in big ways. Also, as businesses continue to reopen, however, we expect to see a gradual recovery, so buyers may need to act quickly to capitalize on the present price levels. Looking at the residential market recovery, Kenya’s unique position as a regional business hub, together with current government interventions, will also go a long way in supporting this. All in all, when it comes to the future of real estate, investors have a lot to look forward to.

Jackline Mukami is the Editor, Management Magazine. |E-mail: [email protected]

24 March 2021 Management Magazine issue no. 090 management | special feature

issue no. 090 March 2021 Management Magazine 25 management | EXECUTIVE CHAT From the Ground up: Kenya Experiencing Rail Sector Renaissance

The railway system, which had its golden age in the ‘90s, and was neglected for decades, now recovers its importance in a new age.

By Jackline Mukami Kenya’s Rail Network is on the Cusp of a New Dawn. Under the organization in Kenya mandated to provide the rail infrastruc- leadership of Philip Mainga, Kenya Railway Corporation (KRC) ture; we oversee the development of the railways, the opera- has developed to new levels of service, positioning itself as a tions, and maintenance of the railways. critical part of the integrated supply chain and one of the fast- Above all, our core mandate as a Public institution is to man- est-growing sectors in the country. age the assets on behalf of the Government and also liaise with Mr. Mainga’s, having worked in the Railway industry since our customers in terms of logistics, as well as the movement of 1996, his rich career in the industry not only gives him a keen goods and services across the Country and the Region. understanding of the railroad’s place in history but also its role in driving the Kenyan economy forward. In a wide-ranging inter- MM: What are some of the highlights about KRC that you are particularly proud of? view with Management, Mainga spoke about the PM: One of the biggest accomplishments that transformations that have been taking place at I am particularly proud of is the transition that KRC, his perceptions on the Corporation’s modus has taken place at KRC over the years. When I operandi, and what the future of the rail industry joined Kenya Railways back in 1996, there was looks like. a huge decline in the process of management of railway services in Kenya which was affect- Management Magazine (MM): Tell us more ed by the financial downturn and the recession about Kenya Railways Corporation and its that was happening around the world. This had mandate as the national rail- massively affected the railways, and a lot way of Kenya? of readjustments had to be made. Philip Mainga (PM): Come 2006, the govern- As KRC, our man- ment decided to privatize date is expansive all concession railways in that we are and we handed over meant to pro- the KRC’s assets to Rift vide world-class Valley Railways. Fast rail services in forward to 2017, we Kenya. This took over the opera- means that we tions of the railways are the only Philip Mainga, CEO, Kenya Railway after the termina- Corporation (KRC). PHOTO|COURTESY

26 March 2021 Management Magazine issue no. 090 management | EXECUTIVE CHAT

tion of the concession agreement. The Standard Gauge Railway used to support railways were exposed to grabbers. Kenya rail- (SGR) line also happened to be birthed in that year. ways then lost their position and their role in the country. Looking back, one of the most motivating things is that What we are currently doing is to recover said assets and some of us pioneered the development of the Standard Gauge bring back employment and investments that were lost in dif- Railway (SGR). ferent parts of this country. Therefore, two years ago, we part- nered with EACC, the Ministry of Land, and all agencies that are MM: In your opinion what impact has the SGR had on your mandated to support us in the recovery of the assets. So far we development strategy as a railway supplier? have recovered almost 90 percent of the land in Kisumu and PM: SGR is one of the key facilitators in terms of business and 80 percent in Nakuru. So far, we have recovered over 10 billion a huge contribution to the economy. Thanks to SGR, we have Kenya Shillings worth of assets. opened up a lot of areas to development. We have major towns along the lines growing at a fast MM: Do you think that the rail pace. You cannot also overlook its industry is poised to eventually huge and positive impact on em- “There’s Never Been a More Exciting take the center in the transport ployment, manufacturing, as well Time to Work in the Railway Industry” sector? as industrialization. PM: We are not only poised to The SGR is also contributing take center stage, but we are also a lot to the tourism sector and the revival of this economy going to provide an alternative means of transport in the sector. through tourism. In my view, we are now past the 1.5 percent What else would a Kenyan need anyway, besides a fast, afford- contribution to the GDP of this country. able, and efficient mode of transport? We cannot forget to mention the efficiency in the movement What is required of us as a country is to trickle down the ben- of goods and services across the region as far as transport is efits to the mwananchi so that we put money in their pockets. concerned. And our mandate is to serve that purpose. That said, the transport business is meant for all of us. We MM: You have demonstrated a great focus on rail rehabilita- are not taking away customers from other modes of transport; tion and reviving projects that have been dormant for more rather we are complementing each other. I believe that the than two decades. What role will this move play in the rail market is wide and large enough to accommodate all of us. industry? PM: We have being reviving some of the assets that have been MM: Both passengers and operators in the rail industry are dormant for over ten years. This includes reviving the old rail- excited to see how the rail transformations will improve the way line between Naivasha and Malaba, as well as linking it railway system moving forward. What are your key priorities with the SGR. This will ensure a seamless rail system for both come 2021? passengers and cargo between Mombasa and Malaba. The PM: Our focus this year is to attain an integrated system for rail initiative is expected to stimulate the economy as well as ease services in this country, both for passengers and freight cargo. cargo movement to neighboring landlocked countries using We also look forward to sustaining the momentum to gain the Port of Mombasa. our position back in the economy and the country. We want to We have also revived other lines, like the Thika-Nanyuki create employment, facilitate business, and re-establish rail railway line and in the reviving process of the Nakuru-Kisumu systems within the country to match the international stan- line. We have also revived the line linked to Kisumu port that dards. And by that, we will achieve an edge of competitiveness connects Kenya to ports in Uganda and Tanzania. From this per- as well as complement other sectors in the transport industry. spective, this move will serve to cater to all economic sectors and spur growth in the Country and the Region.

MM: You have also been at the forefront in a spirited fight to recover KRC assets worth billions. Tell us more about this Jackline Mukami is the Editor, Management move and its impact on the rail industry. Magazine. | E-mail: [email protected] PM: Railway used to make billions and supporting this economy. However, over time, the infrastructure degenerated and was di- lapidated. As a result, the land and the facilities that were being issue no. 090 March 2021 Management Magazine 27 management | BIG IDEA Passive Real Estate Investing, What You Need To Know

Passive real estate investing is one strategy to have a constant cash flow without much active participation on your part.

By Jackson Wanjala

seven rules to follow.

Pick your game plan Investing in real estate for passive income is not one-size-fits-all. Before wading in, first, figure out what strategy fits best. For instance, consider whether you’re more interested in owning an apartment building or multifamily home to generate real estate passive income versus a commercial building in which you’re dealing with business tenants. It’s also important to think about how involved you want to be when it comes to things like collecting rent or handling repairs, and whether you’d prefer to hand off those duties to a property management company. At the end of the day, there is no right answer - it depends on you as nvesting in real estate can be a smart your investment and ongoing rent- the investor and where your comfort move if you’re interested in creating al income. That can help to ensure a lies. Inew income streams. It is a great more comfortable retirement or help way to generate a passive income to keep you afloat if an economic Passive doesn’t mean hands-off that’s not dependent on your princi- downturn results in the loss of your Generating real estate income pas- pal employment. primary job. If you are interested in sively can help you make money in As a landlord, you can reap the using passive real estate investing your sleep, but it requires putting in dual benefits of appreciation from strategies in your portfolio, here are some work upfront to get that income

28 March 2021 Management Magazine issue no. 090 management | BIG IDEA

flowing. Too many people are pas- ties. Or you could choose to spread Know your time horizon sive about the investment decisions your investment dollars across differ- Passive real estate investing is themselves, and that can lead to very ent real estate mutual funds, real es- something you could include in your active headaches. tate investment trusts, or crowdfund- portfolio for years to come, but it’s While there are plenty of oppor- ed rental properties. Diversifying real important to know your time horizon tunities to create a passive income, estate income streams is key to bal- when deciding which properties to rental property investors can’t skip ancing risk and reward. invest in. High-quality real estate is out on due diligence. Investors more illiquid in nature and designed should be proactive in thoroughly Pay attention to real estate mar- for the long term. That means if you researching investment properties. ket trends anticipate needing the cash you’re That means asking questions about Certain segments of the real estate planning to invest in a rental proper- market may perform better than oth- ty in the next five to 10 years, you’ll ers during periods of market volatil- need to think ahead about how easy ity or broader economic shifts, such The information you it will be to eventually offload that as a recession. For instance, the mul- asset. Again, that goes back to per- glean from the real tifamily sector has been potentially forming due diligence and studying estate market will more resilient than commercial prop- market trends so you have an idea of help you pick out the erties such as hotels or office build- what demand for the property will be best possible market ings during challenging economic like down the line. to hold a passive environments. Professional help can make passive income property, as While multifamily housing isn’t real estate investing easier completely risk-free, it may offer Whether you’re investing in real well as identify prop- better opportunities for returns if estate for passive income for the first erty listings that prom- demand for residential rental units time or you have several years of ex- ise good cash flow. remains high. Learning how various perience owning rental properties, parts of the real estate market react consider calling in the professionals to changing economic conditions can for help. That starts with connecting the property and the seller before help you find the best opportunities with an experienced agent who can committing to the purchase. And if to keep passive real estate income walk you through the pros and cons the answers you get leave you with coming in consistently when the of various investment options. even more questions, you should country is experiencing a downturn. Once you find a rental property for probably move on. Choose the right capital sources passive income, your team may ex- When buying real estate for pas- pand to include a property manager, Diversification matters as much sive income, taking out a loan is an real estate attorney, and contractors to as location obvious choice – but don’t overlook get the property in shape or keep it When using real estate for passive the benefits of leveraging retirement maintained. Some of your profits will income, it’s important to consider the assets to create rental income. A go toward paying them, but it can be level of diversification in your port- self-directed Individual Retirement well worth it if you’re able to gener- folio. Account (IRA) allows you to make in- ate real estate income without doing Investing in a portfolio that’s diver- vestment decisions in areas based on any heavy lifting yourself. sified by property type, tenant mix your knowledge and expertise. and geography will greatly increase You can use a self-directed IRA to Jackson Wanjala the probability that it will provide a purchase residential rental properties, is a Real stable and predictable stream of in- commercial rentals, or even land to Estate Realtor and the Founder of come over the long term. Depending generate passive income. Leveraging Vecasa Enterprises, a Real Estate on how much you have available to IRA assets can help you avoid taking Consortium. | E-mail: wanjala@vecasa- invest in passive real estate, that may on debt and having interest payments entreprises.com mean owning multiple rental proper- on a loan detract from your returns. issue no. 090 March 2021 Management Magazine 29 management | BIG IDEA

environmental downturns caused by Real Estate Could the pandemic, which is yet to be fully contained, re-inventing the wheel could be the magical key to breathing Be the Hidden fresh air in the economies. Investing in Real Estate Gem for Unlocking This article will delimit itself to ex- ploring real estate as one of the major economic drivers in the world. Economic According to an article authored by Paul Sullivan and published by the New York Times in October 2020, real Development of a estate is likely to remain a favorite of wealthy investors because it can be owned indefinitely since it is physi- Nation cal, has a predictable cash flow, and usually appreciates in value. Sullivan Real estate is one of the best ways to generate cash flow. however quips that due to the impact of the COVID pandemic, investors are now looking for different types of By Goretti Kimani real estate - supporting the argument that there is a need for a paradigm shift mindset for future real estate in- hile it is the responsibility vestors. of any government to de- Real estate as an Wvelop and sustain systems asset class has ma- The Opportunities Real Estate that ensure that their citizens’ per tured. Market partici- Represents for Investors capita income is on an upward tra- pants need to realize Needless to say, there are varieties jectory path through the growth of this and make the of real estate ideas to select from for their GDPs, individual citizens must any individual or organization inter- appropriate adjust- participate in this exercise by employ- ested in venturing into this progres- ing the various factors of production ments. sive sector. The choice will be deter- and reaping the rewards for each, i.e. mined by several reasons including; land, capital, entrepreneurship, and sectors, to focus on contributing to a capital, location, and business design labor. much healthier economy where pros- among others. It is therefore advis- Economic development is a prod- perity and improved quality of life able that the entrepreneurs and inves- uct of positive outcomes emanating is tangibly realized by its populace. tors consult with their business ex- from improved levels of businesses, Though the onset of the COVID-19 perts in order to analyze the risk fac- employment, income distribution has created several economic casual- tors, plan how to cushion or mitigate patterns, as well as fiscal solvency ties from across the industry divide, against the same as well as available that will indispensably birth a combi- economists quip that resilience, deter- opportunities, as a sure bet on the nation of increased retention and ex- mination, innovations, and even per- return on investment (ROI). Some of pansion of existing businesses as well severance will create economic giants the real estate opportunities include as creation and success of new busi- in the future. commercial real estate investors that nesses. It is therefore crucial for all Due to the grim picture evidenced focus on industrial, office, retail, hos- investors, regardless of their industry by the continued economic, social, and pitality, and multifamily projects and

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is beyond the investors’ control like inflations, pandemics like COVID-19, economic performance, and consumer behaviors. Being cognizant of the generic risks will enable the investors to diversify their business designs to handle the shocks and tremors that are birthed by generic risks. Another risk is the eccentricity risk which is peculiar to a particular real estate that the investor has opted for. Such eccentric risks may manifest in property location, environment as well as social factors. There is also the risk of leveraging which calls for investors to factor in the sizes of their debts whose amounts communicate are considered lucrative with the po- occupancy as well as collect rent on a the level of risk and expected returns. tential for higher cash as compared to commission among other duties. Other risk factors that investors others. Real estate industry players quip must consider could be the cost cred- Secondly is residential real estate that to reap maximum returns, a hy- it in the short run as well as the long also referred to as land-lording. This bridization of the various types of term, changing customer preferences is one of the oldest trades where in- real estate is advised. among others. vestors receive both reasonably good Although real estate enterprise is cash flow and a strong investment appetizing, there are imminent risks In conclusion asset that can create a great revenue that should be factored in before Real estate has the potential to re- portfolio should the investor expand launching the business regardless of verberate the economy and skyrocket the businesses. the type of real estate ventured in. the GDP of any nation as well as cre- Land real estate is another invest- David Scheler’ take is that real estate ating employment opportunities. ment that significantly focuses on is not for the faint-hearted and risk- Individual preferences on the speculations where the investors buy averse individuals since the rule of choice of real estate, their financing land that has the potential to appre- any business venture is ‘the higher options are subjective issues and vary ciate in future. Some investors may the risk, the bigger the return’ on the from one individual or company to also opt to develop their land through equity invested and the converse is another. However, since it is the era of the building of ‘gated community true meaning that you can reap big or a knowledge-based economy, anyone houses’ then sell them to would-be you can lose big. who wishes to venture into real estate homeowners. Another investment is It is therefore paramount that must gather just about any relevant flip-property real estate where inves- would-be real estate career develop- information required quantitatively tors strategically buy from distressed ers seek knowledge on the pros and and qualitatively to ensure that their home-owners, rehabilitate, repair, cons to advise their decisions and investment decisions, both current and modernize the facility and then also understand the level of stamina and future ones are intelligently ad- sell for a profit. required to avoid the business shocks vised. Property management real estate experienced by ignorant business- which is also very ideal for real estate men. Goretti Kimani is a full mem- business enthusiast who lacks the ber of KIM, IHRM, Women On Board capital to invest in buying, speculat- Risk factors to consider Network (WOBN), Author, and a HR ing and selling. Property managers First, it is important to consider practitioner / Email: gorettikimani@ handle maintenance, ensure tenant the obvious generic market risk that gmail.com

issue no. 090 March 2021 Management Magazine 31 management |SMART SOLUTIONS

the management company, thus giv- Management Company ing birth to a tripartite arrangement. Therefore, in the same way, that the Protects Your Investment: lease contains rights and obligations owed by the buyer & developer to one another, it similarly has rights and ob- It’s That Important! ligations owed by and to the management company. By Ian O. Odongoh Where Management Companies occur There are many ways a property manager can save you Usually, any development that will time and money, so you can separate investing from have more than one dwelling unit operations. registered on the same piece of land, will have a management company. The ingenuity behind this is that if a developer constructs say, 100 apartments/ maisonettes on a parcel and transfers them to buyers, each of the 100 buyers also acquires a share in the management company; thereafter, the developer transfers the title in respect of the mother parcel to the management company. This is what is called reversion. In addition to holding the reversionary interest, the management company will also own the common area.

icture this; after saving for so have a strong and vibrant manage- Common Area many years, you have finally ment company. In any development, the property Pmoved into your dream home; a Loosely speaking, a management may be classified into two categories. few months into the move, you notice company/manager, in the context of There is that which is comprised in a that one neighbor has affixed brightly real estate is the entity that is tasked unit sold to a buyer. This entails the colored signs on the compound of the with ensuring that common areas of rooms/ structure as defined in the premises, another is running a fully the development are well maintained, architectural drawings. Whatever stocked retail shop with hundreds of and holding the reversionary interest. remains after taking away what is customers in his unit, the stairs, corri- The latter is a legal term that refers comprised in a unit shall constitute dors and walkways in the compound to owning the residual rights on the the common area. This includes gates, are cluttered with personal items, main property once the developer ex- paths, staircases, elevators, roofs, gut- and the mayhem goes on and on. The its from the purchase equation. ters, and other similar amenities. image is not the peace and calm that In legal standing, a management In the same way that unit owners hopeful homeowners have in their company is an artificial person, sep- have the responsibility of owning and minds when they make that first step arate and distinct from its members. maintaining what is inside their units, towards property acquisition. It has the power to own property, so does the management company It is for this reason that responsi- and enter contractual arrangements. have the duty to hold, maintain and ble developers, with the help of their This is why when getting into a sub- repair the common area. diligent lawyers; have embraced the lease arrangement with a developer, a Accordingly, one of the things to practice of ensuring all developments buyer also enters the agreement with

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look out for as a home buyer is the By hiring a professional enhance owners’ cooperation by pool- protection of the common area, more property company, you ing together finances to go towards importantly, the power of the man- can add great value to maintaining, managing, and devel- agement company to maintain the oping shared amenities for the better common area in a clean, and orderly your rental property in- enjoyment of their units. state, guaranteeing the homeowners vestments, something equitable access to the use of the com- that many real estate Managing the Manager mon area. Ensuring that gardens are investors agree with. Something else that your lawyer well maintained, corridors cleaned, ought to look out for in the lease docu- walls repainted, fire alarms, and fire- the security of the perimeter and con- ment is how the affairs of the manager fighting equipment maintained is trolling access to the premises is per- are carried out. Appreciating the fact therefore within the mandate of the haps the most important duty that an that it is a company whose shares are management company in so far as owner expects from the manager. It controlled by unit owners, the lease these facilities lie within the common also has the responsibility of tending ought to provide for the manner in area. to the landscape and general cleanli- which, depending on their numbers, ness. unit owners can democratically par- Services offered by the manage- As noted above, the manager is ticipate in decision making, formu- ment company an artificial person with the power lation of rules, and utilization of the Once in occupation, every home- to delegate their duties to others. It finances paid to the manager. owner has a legitimate expectation is therefore not unusual to have ar- It’s advisable to enlist the services that certain services will be provided rangements where other specialized of a company secretary as well as an in respect of their unit, other units, and service providers are sub-contracted auditor, tasked with keeping records the common area. Where an owner’s to supply cleaning, security, garden- of members & directors and making unit is concerned, it is the Manager ing amongst other services. sure that financial accountability is that usually oversees the maintenance Payment of government fees such as upheld. of the utility meters, pipes, and cables property rates payable to the county It was Henry Ford that noted, connecting to the unit, and for the government, and land rent payable to “Coming together is a beginning, purpose of safety, it may be a term in the leasing authority, for now, remain keeping together is progress, working the lease that the manager will require a responsibility of management com- together is a success!” in the sphere of units to be fitted with firefighting panies. However, the law on sectional property ownership the importance equipment. The manager will there- properties is undergoing amendment, of cooperation cannot be overstat- fore conduct an inspection of a unit and in the future, it may be possible ed. Hazardous and chaotic dwelling to ensure the best safety standards are for an owner to pay the rates and rent spaces don’t just occur overnight; complied with. on their respective unit. they are a result of dereliction of the Although each unit owner is enti- responsibility of occupants. It is there- tled to quiet enjoyment of their unit to Financing the Manager fore incumbent on owners to abide by the exclusion of all others, the grati- From the foregoing, it is clear that the framework set up by developers fication of an owner will often be af- your average management company from the onset. This goes a long way fected by what goes on in the neigh- has a lot of responsibilities. To effec- in safeguarding the vision of an aes- boring units. It is for this reason that tively perform on its part, the man- thetically appealing, secure, and har- the management company is tasked ager must be provided with adequate monious community, which can only with ensuring all unitholders abide and timely financing. This will usual- be through a strong and vibrant man- by principles of good neighborliness. ly be provided in the lease document. agement company. Emitting foul smells, loud noises, and A well-drafted lease requires the unit keeping animals within one’s premis- owners to pay an affordable amount Ian O. Odongoh is an Associate es are some of the nuisances which a regularly which goes towards the run- Advocate at Karanja –Njenga manager will not permit in any of the ning of the manager’s affairs. This is Advocates. E-mail: ianodongoh@ units. what is known as a service charge. gmail.com / [email protected] When it comes to the common area, The idea behind service charge is to issue no. 090 March 2021 Management Magazine 33 management | SMART SOLUTIONS Benefits of using big data analytics for inclusive Real Estate

Many real estate firms have long made decisions based on a combination of intuition and traditional, retrospective data.

By Nancy Marangu

he real estate contractors/ on inclusive infrastructural needs for constructors can utilize digital Persons with Disabilities (PWDs). Ttechnologies to improve the As a result, globally governments development? performance of health, transporta- are utilizing big data to support the Big data systems store, process, tion, energy, education, and water development and sustainability of and mine information in an efficient services leading to higher levels of real estate. The inclusion of these manner to produce information to comfort for its citizens. Commercial technologies in urban development enhance different smart real estate markets are at the heart of leverag- enables real estate developers to services. Also, big data enable deci- ing emerging technologies such as maintain standards, principles, and sion-makers to plan for any technical big data analytics to analyze data on requirements of smart city character- building expansions with ease. Some instrumented infrastructure, public istics. These characteristics include of the benefits of using enabling big and private urban transactions, and sustainability, resilience, governance, data analytics for real estate develop- citizens’ mobility to transform urban enhanced quality of life, and intelli- ment include: development. As such, digital infra- gent management of natural resourc- First, with resources becoming ei- structures are gaining popularity es as well as inclusive buildings that ther scarce or expensive, it is import- due to the access of data from various care for the needs of PWDs. To achieve ant to integrate systems that enhance sources which can be analyzed across this, the Internet of Things (IoT) pro- better and more controlled utilization multiple data layers drawn from dif- vides capabilities for the collection of scarce resources. Big data analytics ferent sectors and regions within the of data in the urban environment allow for real-time resource monitor- real estate sector. The ability to vi- through applications such as sensors, ing capabilities that enable the eval- sualize real-time data and insights smartphones, and tablets. The storage uation of resource utilization while drawn from the urban environment and analysis of this data is made pos- pin-pointing waste points and better identifies its connection with real sible by high-speed mobile networks distribute resources while controlling estate value, provides an unprece- such as long-term-evolution networks costs, and reducing energy and nat- dented potential for enhancing real (LTE), the fifth-generation of mobile ural resources consumption. In ad- estate development decisions, pri- networks (5G), and cloud comput- dition, one of the important aspects marily through better forecasts for ing. Significantly, cloud computing of analytics is that they are designed building utilization, more accurate supports big data collection, storage, for interconnectivity and urban data assessment of the purchasing power and analysis across cloud nodes and collections for resource use efficiency. of users of real estate, and by a better facilities. Secondly, sensor information on risk assessment of real estate users. the urban environment for improved What is more, this data can be used What are the benefits of using real estate management; is provided to segregate data that informs policy big data analytics for real estate for by IoT enabled sensors, which

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tools from all the available technologies. Further, deploying and managing big data systems also require new skills compared to the ones possessed by database administrators and developers focused on relational software. However, the above issues can be eased by using a managed cloud service, but IT managers need to keep a close eye on cloud usage. Additionally, optimizing the benefits of big data applications neces- sitates that industry players invest more in technology and better development efforts. Ultimately, the value and effectiveness of big data depend on the workers tasked with understanding the data and formulating the appropriate queries to direct big data detect pollution, since the number of mapping locations of public places analytics projects. Some big data tools people at a location, identification of and businesses that are accessible to meet specialized niches and enable people movement, and gatherings PWDs. On the discursive side, data less technical users to use everyday may go along well to inform real es- on compliance with accessibility stan- business data in predictive analytics tate managers on what kind of activ- dards can be used as a tool to promote applications. ities are taking place in a neighbor- more inclusive real estate. hood, of which can provide valuable Lastly, analytics not only creates In conclusion insight concerning real estate value. a facilitative environment for better Critically, industry stakeholders The impact on commerce and the flow services, and efficient work and living ought to set policies to ensure data of people caused by various types of models, and less waste (in time and accuracy, quality, security, privacy, development and tenant mix can also resources), but also breeds smart real and control of the data. Furthermore, be analyzed using big data analytics. estate citizens endowed with a bet- ensure to put in place data documen- Thirdly, big data provides for im- ter quality of life. This is the result of tation standards to provide guidance proved management and control better planning of living/workspaces on the content and use of the datasets. of different real estate applications and locations which enable better and What is more, real estate developers leading to increased interoperability. faster services, and the availability ought to have the comprehension that Streamlined data and resource sharing of enough information to make in- technology can be very useful when increase information transparency for formed investment decisions. considering the management and pro- urban developers. This collaboration tection of environmental resources, and communication between entities What does this imply for real es- infrastructures, and natural resources provide improved operations, pro- tate developers? with the ultimate goal of increasing vide better customer service, creates Real estate developers need to rec- sustainability and inclusion. personalized marketing campaigns ognize that besides the processing based on specific customer preferenc- capacity and cost issues, designing es, and ultimately, increase profitabili- a big data architecture is a common ty. Businesses that utilize big data hold challenge for users. Therefore, big a potential sustainable competitive data systems ought to be tailored to Nancy Marangu is a advantage. the real estate specifications implying Communication & Research Indisputably, descriptive uses of that IT teams and application devel- Specialist.|E-mail: nancy.marangu@ big data include crowd-sourcing and opers have to piece together a set of gmail.com issue no. 090 March 2021 Management Magazine 35 management | SMART LEADERSHIP How to Increase Psychological Safety in the Workplace The highest-performing teams have one thing in common: psychological safety — the belief that you won’t be punished when you make a mistake.

By Joyce Kaduki

ames complained that his boss, feel safe. They were not safe. safe and confident that they can take Susan, regularly invited team What Susan was doing is counter to risks around their managers and col- Jmembers to share ideas and what psychological safety is all about. leagues, and still be accepted and not feedback on team projects. You might According to Dr. Amy Edmondson, punished even if what they put for- wonder why this was a problem. who coined the term and is au- ward falls flat. Well, it turned out, that Susan thor of ‘The Fearless Organization: Benefits of psychological safety would later use whatever her team Creating Psychological Safety in the to organizations members had shared with her, against Workplace for Learning, Innovation, Psychological safety in the work- them. She would use it to paint them and Growth’, psychological safety place produces many benefits for in a bad light at meetings they were is a belief that one will not be pun- team members, and for the organiza- not privileged to attend and to victim- ished or humiliated for speaking up tions, they work for. The advantages ize them. Naturally, they clammed up. with ideas, questions, concerns or take many forms. They stopped talking. They did not mistakes. It leads to people feeling Since early highlighting of mistakes

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is encouraged, problems are captured solutions, market breakthroughs, ployee engagement and productivity. and addressed before they snowball and a culture of innovation. Further, According to a Google project called into bigger problems. Team mem- employees feel safe among their ‘Project Aristotle’, psychological safe- bers are encouraged to explore more peers. This improves morale, social ty is the secret behind high-perform- and take risks, which leads to better well-being, and a higher level of em- ing teams.

Ways to increase psychological safety in the workplace

As more people are working remotely or virtually than did before the ing it safe for employees to challenge the status quo. This will promote pandemic happened, the need for psychological safety is even greater. a culture of trying new and different ways of doing things, increase This is because team members are distanced – either physically, emo- learning and development, and lead to breakthroughs in systems and tionally, or intellectually – and therefore have a greater need for assur- processes, and product development, and service delivery. ance There are many things you can do to increase psychological safety in the workplace. Below are some ideas. 4.Be open to feedback. Make it safe for your team members to give feedback, both good and 1.Ask, rather than blame. bad. This does not mean that you pledge to implement whatever they Ask questions and then listen to understand. This shows employees share, but that you give them a hearing ear and their suggestions and that you are interested in what they have to say, and encourages them ideas due consideration. to speak out. When they do speak out and tell you about mistakes they have made or things that are not working well, don’t blame them. If you 5.Encourage participation. do, they will get defensive and shy away from speaking in the future. Give your employees a voice by welcoming their contributions. Rather than you being the source of all decisions and solutions, you 2. Accommodate divergent views and healthy con- allow them to make valuable contributions to the growth of the orga- flict. nization. Psychological safety does not mean that there will be harmony at 6.Deal with negativity. all times. It does mean, however, that even when there is conflict and Do not tolerate negativity on the team, otherwise, it will become employees do not see eye to eye with their managers, they will still be contagious and spread to others. Any employee who speaks negatively treated with respect and dignity. They will not be castigated for harbor- about colleagues should be notified that negativity will not be tolerat- ing views that go against the norm. When you encourage your team ed. Should they persist, discipline them accordingly. members to share ideas that go against what is accepted as standard practice, it will promote broader thinking and perhaps, novel prob- 7.Measure psychological safety. lem-solving approaches which have not been tried before. This will lead Laura Delizonna, in a Harvard Business Review article titled ‘High- to better solutions and breakthroughs. Performing Teams Need Psychological Safety. Here’s How To Create It’, shares the idea of routine team surveys on psychological surveys and 3.Encourage risk-taking. other team dynamics. This will help the team leader keep tabs on how Develop a culture that promotes curiosity and exploration, by mak- the team is doing in this area, and uncover areas of improvement.

Conclusion themselves, and to speak out. When Psychological safety starts with the the team leader promotes it, both the Joyce Kaduki is a coach, DISC leader. You, therefore, need to take team members and the organization trainer, facilitator, and speaker. She the lead in creating an environment they belong to benefit. There are high- specializes in leadership, strategy, and where your employees feel safe to be er levels of engagement, increased financial management training. Email: teamwork, and better performance. [email protected]

issue no. 090 March 2021 Management Magazine 37 Management | the entrepreneur

“You’re not a real estate agent because you happen to know of a prop- Tips for Buyers erty being sold somewhere.” He says Musa Kariuki of Big Haus agrees with that sentiment. He says that and Aspiring your reason for acquiring a property should direct you to the best places to buy that property. If a client is con- Agents sidering acquiring property for resale, the best places to buy is the high-end places where the market value is des- Working as a real estate agent has numerous tined to appreciate in a short while. challenges and pit-holes. Nevertheless, if done “It’s no use selling property for resale, and then the client waits ten right, it can be a very rewarding career. years for it to appreciate,” Musa says. That kind of property is best suited By Mercy Kambura for people seeking to settle there as their dream homes. couple of weeks ago, disgrun- whom he learned the best practices tled property buyers who had in Real Estate. The last company he A Piece of Advice Word for Abought land off-plan were in worked for shifted his mindset on the Aspiring Realtors the news crying foul after the Real way; they were majorly client-orient- Estate company failed to deliver on ed; they were keen to inquire why their promises. This was not a new they wanted to invest. For the first scenario; there have been similar cas- time, he saw someone walk in with a es of Real Estate Developers making desire to buy a property, and the boss plans, advertising, and selling prop- said, “No, I don’t think that’s good for erty and failing to deliver on their you. You need to rethink this.” promises. He was gobsmacked; his thought While shifting blame is the lowest was that Real Estate was about mak- hanging fruit, it’s much more helpful ing a sale, dumping a property on to think about where the rain started someone by whatever means neces- beating and how to take cover in the sary, and moving on to the next. But future. Whichever side of the fence he got one valuable lesson, “It’s not you’re at, what can you do to protect about making a sale, it’s about build- yourself as an aspiring buyer and ing a relationship. Realtor? “When someone walks into my Management talked to two Real office, and they want to buy prop- Estate Gurus, Paul Kinoti, the found- erty, the first question I ask them is, er and Managing Director of Avanti ‘why?”’ Corp Limited, and Musa Kariuki, the In Real Estate, you’ll never be able founder of Big Haus Limited. They to serve anyone until you understand have offered insight into how the best the reason behind the need. Some peo- practices for both sides. ple aren’t able to make up their mind; it’s your job as a real estate agent to A Fresh Eye to Real Estate help them see their needs, what will Before founding Avanti, Paul work for them now and in the future, worked with three other firms, from and advise them accordingly.

38 March 2021 Management Magazine issue no. 090 Management | the entrepreneur

Suppose you’re looking to dive into Both Paul and Musa first worked for yet. Many Real Estate companies ap- the real estate waters; how do you different companies before settling to proach a landowner and negotiate a evade the blue hole that has swal- start their own companies. deal, after which they pay an agreed lowed numerous Real Estate com- “Start by being a real estate agent sum as an initial deposit. They then panies in the recent past? Both Musa for a property owner, earning a com- proceed to advertise and sell the land and Paul advise you to take time and mission, and learn the ropes, the laws, off as their own. If the property doesn’t study the market, know-how proper- and the loopholes to avoid.” Musa sell as fast as they hoped or aren’t faith- ty law works in the country, and even offers. ful in clearing the balance, they risk be- if a lawyer is doing the conveyancing The Kenya Real Estate Developers ing exposed as scammers. or you, explore what’s happening to Board, formed in July 2020, re- also explain to the client. vealed steady growth in Real Estate What to Do? The best way to build a business is Development with a peak in 2016 and The two Real Estate gurus advise by first learning your way through it. a steady decline after that. While the buyers not to finance a project whose decline may be due to anticipated po- transparency they can’t vouch for. In Real Estate, litical instability in 2017 and the pan- As both a Realtor and as a buyer, do you’ll never be demic in 2020, there’s another likely searches to make sure that the proper- able to serve reason at play – people are warier of ty you’re about to trade in has not just anyone until you investing in property. the mother title but also the subdivided understand the One of the significant reasons for properties that have registration num- Developers not being to deliver the bers. reason behind the land is selling land that is not theirs Many people don’t do due diligence need. before they invest in property – and they should. Fraud thrives in places where people are working under FOMO (fear of missing out). Most Real Estate firms sell property with an ur- gency that leads people to buy promises, not property. Instead, he advises buyers to do proper digging and in- volve lawyers explaining the process and the paperwork involved. “If the firm is relying on your money to build a project, what happens when they don’t get enough money to complete the project. Ensure that the firm you’re using has a proven track record of delivering on their promises.” Paul asks. Real Estate is an emotive business, given the large amounts of money poured. It should therefore not be ap- proached hurriedly.

Mercy Kambura is a Multi-Media Communication Expert and a Managing Editor of an International Magazine. E-mail: [email protected]

issue no. 090 March 2021 Management Magazine 39 Management | SMART LEADERSHIP

to create wealth. As a working person, when your passive income sta- It’s Time bilizes and surpasses your expenses, your goals also shift from survival to self-actualization. We Redefine According to Rich Dad Poor Dad, a house you buy to live in that doesn’t allow you to earn a passive income is not an investment but a liability. In Investment fact, most of the things we call investments, like cars, clothes, holidays, as An investment in yourself means increasing long as they are not building your pas- your ability to take and hold information sive income, are liabilities. The 21st century has taught us that and use it to bring about results and cause nothing is as unsteady as a steady job. impact. The concept of paying for a house that you eventually call your own, through a mortgage, based on the salary you earn monthly needs to be rethought.

Investing in Yourself Truth be told, most people know that professional credentials are a good investment, especially in climb- ing the traditional corporate ladder. This investment guarantees more opportunities and better pay. But does this belief stand on solid ground? Sir Ken Robinson, a renowned edu- cationalist, believes the value of university degrees has dropped dramatically over the decades. You are no longer guaranteed a job when you come out of university. Even worse when you pursue a master’s degree. Despite the sacrifices made, the expenses in- curred, and job prospects only being By Edwin Moindi available in specific fields. Sir Robinson recognizes the drop wning a home is one of the Rich Dad Poor Dad is a seminal book in creativity and ability to innovate largest single investments on financial independence. The idea among the educated. He states that Oa person can make in their being, you create a passive income schools don’t teach life skills essen- life. It takes time, and effort and we from the revenue your assets create. tial for building thriving careers and need assistance along the way. This The balance here is to ensure your businesses. He believes that the edu- article seeks to disprove the belief expenses are below your passive in- cation system is broken - churning out that owning a home must be the ul- come. And you reinvest the difference degree holders that conform when we timate goal in life.

40 March 2021 Management Magazine issue no. 090 Management | SMART LEADERSHIP

people who take risks in themselves to discover whom they were meant to be. This opens us to discover multiple If you are looking out of the window wondering streams of income. what’s next, be bold. Take a stand. It’s time you let The Johari window has four yourself be who you really want to be. Now. window panes. Two of them are very compelling. The first one, your blind spot, are things unknown to you but evident need people who can change, adapt, ‘4Cs’; a category of skills compris- to the people around you. Meaning to and innovate, in a fickle world, with ing Collaboration, Communication, know yourself, you have to get feed- unstable economies. Critical Thinking, and Creativity. back. That is not a very comfortable The traditional business models Skills we traditionally don’t gain in thing to do, but if you make it a habit, that guaranteed us income for so school yet so essential to operate in a you become a better person. long are becoming obsolete. We need brave new world. The second window, the unknown to investigate and adopt new busi- or mystery self, is a portion that nei- ness models similar to what technol- Measuring your Success ther you nor anyone else knows. To ogy-first organizations like Google, How well then, do you measure get there, you must grow, you must eBay, and Amazon rolled out to great against these skills? Are you able to learn, you must discover. This mys- financial success. work with one or more people to suc- tery self is usually discovered at the In 2017, IBM made news when cessfully complete a task? Are you abyss’ edge where the pain is a con- their vice-president of talent, Joanna able to combine verbal, non-verbal, stant companion filled with life-alter- Daley, stated that 15 percent of their and written forms of communication ing situations. This requires a growth hires don’t have a four-year degree. to share a message concisely? Are mindset that embraces change and Instead, they look for candidates with you able to analyze facts and form picks habits that stretch you beyond hands-on experience through book a sound judgment? Are you able to your current self. camps and vocational classes. Apple collect evidence, examine reasoning and Google followed suit while intro- and assumptions, and analyze basic Finally, become comfortable ducing certification courses primed concepts? And do all these in a trans- with failure. for the skills they needed. This may parent, rational, open-minded, and In everything new, start small from primarily affect technology compa- informed way? Finally, are you able the point of interest and passion. Fail nies in the short term but it is a sign to create something new and valued? fast, and learn fast. Don’t repeat the of things to come as technology com- If answers to these questions are in same mistakes, and don’t fail because panies compete and take over mar- the affirmative, you are on the right you didn’t prepare adequately. Be dis- kets from traditional brick and mortar track with the 4Cs. If not, the number ciplined, focused, and humble. This companies. of degrees you have is a smokescreen. should be the most significant invest- The quest should be in developing An investment in yourself means in- ment you make in your lifetime. 21st-century skills in learning. To this creasing your ability to take and hold end, the Partnership for 21st Century information and use it to bring about Learning or P21 was founded. It is a results and cause impact. To do this, non-profit comprising some of the your reading and listening capabili- Edwin Moindi is the author of Self world’s largest technology compa- ties have to increase. Jim Kwik says, & Identity: The Nine Conversations that nies and several US government de- “If knowledge is power, learning is Question, Empower and Transform for partments. They developed the P21 your superpower.” the 21st Century. Email: Edwin.moin- framework, essential for learning in- [email protected] stitutions and individuals. Take a Risk, Leave your comfort The P21 framework holds the Now more than before, we need

issue no. 090 March 2021 Management Magazine 41 management |MONEY MATTERS

.Start small. Turning Real Estate 1 Have a business or career that creates positive cash flow, which you can diversify into part-time real estate into Real Fortune investing. If you’ve never invested in real estate, start small and don’t use Finding success in real estate requires more than simply all your money. No one’s ever looked buying low and selling high. back and said, “My first deal was my best.” You’ve got to learn how to read By Esther K. Njiru the contracts, build your network of specialists—for example, lawyers and o matter how you like to look is more of a tangible form of invest- realtors—and develop a good eye for at, investing in real estate is a ment. It generates consistent and it. This only comes from experience. great way to make a good for- long-term wealth. N The beauty of real estate is that tune. Real estate often proves to be However, investing in real estate you can learn the ropes while start- a lucrative investment, offering both requires more than just an interest. ing small: find some cheap proper- income - in the form of rents - and It requires the right amount of infor- ties, like single-family homes, reno- appreciation - when you sell appre- mation and more importantly, proper vate-and-flips, multi units, or com- ciated property at a profit. Unlike guidance. If this is what you are look- mercial properties. Try to commit as other forms of investment such as ing out for, then here are tips for turn- little as possible while you get some Stock, Bond and the likes, real estate ing real estate into a real fortune; notches under your belt.

42 March 2021 Management Magazine issue no. 090 management |MONEY MATTERS

. understand the economics, short-term renting of residential prop- duce risk. Start with one project. Get then find a mentor. 2 erties is producing the highest returns. your model set, tweak, then buy two. The real-estate deals that look the Unfortunately, real estate is full of Continue and progress until you build prettiest and are easiest to find—such pitfalls. Getting educated through a solid portfolio. as buying a property that has a tenant reputable online sources can help, but Educate yourself, hustle, and cre- and management in place, joining an article, book, or how-to video will ate value. Take massive, determined a crowdfunding website, or buy- be of little assistance in answering the action daily. Talk to brokers, call con- ing into a publicly-traded real estate most important questions you’ll have tractors, view open houses, and go to investment trust—yield the lowest in the heat of a deal. That’s where the meet-ups. Learn! And when you’re right real estate mentor becomes an ready, door knock! The best deal is the Investing in real invaluable resource. one that isn’t for sale. Find it, then find someone like me and close it down. estate can offer . learn, then earn. individuals both 3 Before throwing money away . Profit is in the purchase. immediate income on the HGTV pipe dream, educate 4 Source transactions that con- and long-term yourself! Don’t spend thousands of tain some core elements: they take the appreciation. dollars on coaches and seminars. No shortest amount of time to complete, matter how shiny they make it or how and provide the maximum amount of much you’re told you need an expen- profit while minimizing risk and the returns. The most profitable opportu- sive education, you don’t. Information amount of cash you invest initially. nities are the ones no one else knows is inexpensive and plentiful. Find it or Before really embarking, solidify about, which you find and create. someone specializing in investment your A Team (advisors whose opin- Due to a strong economy, high con- real estate. ions you trust) and B Team (associates sumer confidence, historically low Holding assets is the way to build who turn the gears). inventory levels, and extremely low wealth through real estate. Shelter is a Once you have a plan, pull the trig- interest rates, it’s the best time to flip basic need. Dirt, in and around major ger. Don’t just have a backup plan— houses in the past 40 years. metro areas, is a finite resource, and ensure that even the most airtight High consumer confidence and a demand is constantly increasing. By scheme has at least five exit strategies. strong economy give retail buyers owning a rental on that dirt, you have Remember that the winds of a favor- the feeling that “now is a good time a small business that works to pay off able real estate market can shift rap- to buy” rather than retreat in fear and your mortgage. Flipping is over glam- idly; the last thing you want is to be continue renting. Low interest rates al- orized sometimes – so rent and hold anchored to a dozen unsellable invest- low retail buyers to purchase more of for the win. ments. a home than if the rates were at histor- Boomers and millennials want Finally, know the difference between ical average levels, like 6 percent. Low smaller housing, closer to cities. buying, holding, and trading. Buying inventory levels create bidding wars Additionally, real-estate investors is a no brainer, but it’s what you do by retail buyers, which increase the commoditizing most suburbs and with a property that determines your prices that investors sell their flipped re-gentrification has pushed lower success. Your primary strategy should houses for. income families out. Because of this, be holding onto commercial real es- So, if you can find the deals before these suburbs have seen an increase of tate for the long term and trading out the competition, you can transform a people living below the poverty level residential pretty quickly. Know your little bit of money into a whole lot in in the last couple of years. Buy your market. a relatively short period by flipping cities. houses. If you’re seeking tax-advan- Don’t blow your budget. Most taged passive income, thanks to the projects have surprises or overruns; Esther K. Njiru is a Public Servant, Entrepreneur and a financial rise of the sharing economy and ser- it’s just part of the business. Keep a advisor based in Embu | E-mail: esther. vices like Airbnb and HomeAway, cushion for the unexpected. Lever [email protected] your funds to increase returns and re- issue no. 090 March 2021 Management Magazine 43 management |TECHNOLOGY AI in Real Estate: Ways Investors can Make More Money How Artificial Intelligence Can Help Real Estate Investors Buy and Sell More Intelligently

By Robert K. Njagi

rtificial intelligence is chang- reduce some of the routine employee management thanks to its ability to ing our daily lifestyle and tasks and can increase profits. monitor and predict when a home’s Awork. It’s hard to find an in- Artificial intelligence learns fast- maintenance systems need to be re- dustry not using machine learning er, thinks quicker, digs deeper, and placed. The technology can also keep in some capacity to improve busi- produces more accurate information tabs on rental trends in certain areas ness operations. While the real estate and analytics. For a single investor or and raise tenant rates based on this space has traditionally been slow to group, incorporating AI can provide data once a lease expires. incorporate new technologies, AI’s an edge over competitors. Other factors can also be examined, offerings are turning heads. The technology is also helping to such as building automation and ex- While the adoption of tech in real match deals with prospective buyers, pansion analysis to determine poten- estate might seem slow, significant while also offering a slew of analyt- tial returns based on metrics that im- progress has been made in defining ical tools to monitor risk assessment pact rents, expenses, and profits in the use cases for tech and particularly, and to predict the chances of a loan rental sphere. Artificial Intelligence in the industry. defaulting based on a consumer’s fi- Tech-based companies are forming nancial portfolio. . Data Analytics to capitalize on the advantages of AI, Here are five ways AI is changing 2 Big data also has an essential and corporate brokers and investors the real estate world: role in the real estate industry thanks are incorporating the technologies to to the wide array of information avail- improve customer acquisition leads, .Property Management able about customers and the indus- satisfaction, and service, with the 1 AI has a role in property tries that real estate companies have at understanding that these programs

44 March 2021 Management Magazine issue no. 090 management |TECHNOLOGY

their disposal now. Investors under- ment could return. These bots can also watching and listening. This is not stand that the longer a property is on predict loan defaults so as to increase done to spy — AI must provide more the market, the lower the profit mar- the efficiency of the risk assessment accurate results. Artificial intelligence gin. Tech companies are developing process, pushing borrowers to avoid is designed to learn, and the more it is AI programs that automatically enter less profitable ventures and stick to used, the better its performance. information into online databases properties that will offer the highest Also, the faster the organizations about property specs such as kitch- return. will learn how to make data interoper- ens, room types, basement status, and able and enforce standards, the faster more. . Intelligent Search both customers and businesses will be Software developers are helping Platforms and Virtual able to reap AI’s exceptional benefits. these companies use AI algorithms Assistance4 Companies need to plan their to analyze data and improve multiple About 51% of home buyers began long-term objectives and start care- Tech-savvy real estate their house-hunting process online, fully collecting corresponding data. which is why AI is creating intelligent Collaboration is also a big factor here, CEOs are aggressive- search platforms that could benefit as sharing data sets is essential for ly adopting technol- everyone involved. the industry’s well-being. AI enables ogy-driven strategies Limiting the time it takes to find industry professionals to see a much properties to buy and sell can increase bigger picture and assess properties’ to gain a comparative profitability. Search engines have cer- future value, risks, and opportunities advantage. tainly made it easier for investors to with a level of precision not attainable find fix-and-flip prospects, but AI is before. revolutionizing this process as it col- There are a plethora of attributes facets of their business, such as target- lects data from previous searches to that influence the desirability of a ed marketing, financial and account- produce more accurate results. property. Our lifestyle is always ing, and appraisals. Most of the major search engines changing and tastes shift, resulting in AI helps to break down a growing are now using AI to help users get the constant need of tailoring the liv- index of information regarding vari- more data from a basic property ing conditions to meet the ever-grow- ables that could affect the price of a search. In the past, brokers, investors, ing demand. AI developers can help property. The technology can also set property buyers, and sellers had a real-estate companies to identify income and growth goals through limited amount of information at their those needs and wants and provide an intelligent robot, which can make disposal such as the price and location homes that meet them. adjustments as data changes to help of a property. With AI, prospective Lastly, it’s important to recognize investors reach their financial targets. homeowners and investors can look that AI’s role is to support humans With AI handling data entry, agents at ROI, good neighborhoods, and oth- rather than to substitute them. The representing investors and contrac- er details. home buying experience is often per- tors can work smarter, not harder, to sonal and emotional. Regardless of increase sales and profit margins. The Bright Future for AI in Real how refined these technologies can be, Estate emotional AI belongs to the future, as .Predicting Risk Considering lavish amounts of data it can’t detect and interpret humans’ Assessment and Loan 3 produced in the real estate industry, complicated emotional cues. Well, at Defaults AI’s rapid penetration into real es- least for now. With AI, real estate investors tate software development comes as can eliminate much of the risk and no surprise. However, there is a long guesswork involved in property in- road ahead before we see AI adoption vestments. Smart robots can assess a at scale. Robert N. Kariuki is a property and perform a detailed risk To capitalize on AI’s advantages, Journalist, Content Creator, and an analysis report on it, while also pre- real estate investors and the indus- Entrepreneur. | E-mail: robertkariuki9@ dicting how much money an invest- try have to accept that these bots are gmail.com issue no. 090 March 2021 Management Magazine 45 management | HEALTHY LIVING

How to Recognize and Address Seasonal Depression If shifts in weather zap your energy and make you feel blue, you’ve got classic symptoms of a seasonal Affective disorder.

By Wambui Waruingi

f shifts in weather or generally shorter days zap your those who live farther away from the equator. People with energy and make you feel blue, you’ve got classic symp- a family history or diagnosis of depression or bipolar dis- Itoms of a seasonal mood disorder. Seasonal affective disorder may also be particularly susceptible. order (SAD) is a form of seasonal depression triggered by It is important to treat SAD, because all forms of depres- the change in seasons that occurs primarily in the colder sion limit people’s ability to live their lives to the fullest, to seasons, or winter “blues” as famously referred. enjoy their families, and to function well at work. Here are Why do some people get SAD? According to experts, a few SAD treatment options you might want to consider. seasonal changes disrupt the circadian rhythm: the 24-hour clock that regulates how we function during sleeping and Start with simple changes. waking hours, causing us to feel energized and alert some- Many forms of depression benefit from changes to sleep times and drowsy at other times. schedule, a nutritious diet, exercise and social interaction. Another theory is that the changing seasons disrupt If you have S.A.D., put a winter spin on these behaviors. hormones such as serotonin and melatonin, which regu- For example, even if you want to sleep later, set an alarm late sleep, mood, and feelings of well-being. Women and each day so you can experience early-morning sunshine, young people are more likely to experience SAD, as are which helps with S.A.D. symptoms. What you do at night

46 March 2021 Management Magazine issue no. 090 management | HEALTHY LIVING

matters, too. Basic sleep hygiene like avoiding screens Stick to a Schedule (and any artificial light) helps too. Try to keep your bed- People who live with SAD often have trouble sleeping at time consistent — not too late — and avoid too much caf- night and getting up in the morning. Maintaining a regular feine or alcohol, which can interfere with your quality of schedule improves sleep, which can help alleviate symp- rest and ability to get up. toms of seasonal depression. Keeping a regular schedule will also expose you to light Try a light box at consistent and predictable times. And eating at regular Light therapy boxes give off light that mimics sunshine intervals can help you watch your diet and not overeat. and can help in the recovery from seasonal affective dis- Many people who live with SAD find they gain weight in order. The light from the therapy boxes is significantly the cold season. brighter than that of regular light bulbs, and it’s provided in different wavelengths. Keep a Journal Typically, if you have SAD, you sit in front of a light box Writing down your thoughts can have a positive effect for about 30 minutes a day. This will stimulate your body’s on your mood. It can help you get some of your negative circadian rhythms and suppress its natural release of mel- feelings out of your system. atonin. Most people find light therapy to be most effective Plan to write for about 20 minutes on most days of the if used when they first get up in the morning. One week week - include your thoughts, feelings, and concerns. The of light therapy may be as effective as two, though most best time is at night so that you can reflect on all that hap- people continue light therapy throughout the entire season pened in the last 24 hours. that they’re affected. See a psychotherapist. Get outside Because SAD is a form of depression, it is best diagnosed Natural light isn’t only cheaper than by talking with a mental health profes- a light box, it’s also brighter. Aim to go sional. There are a number of screening outside within 30 minutes after sunrise. questions that can help determine if you Duration depends on where you live and Treat SAD like the de- are depressed. Your doctor will be able the weather. pression it is - with diet, to sort out whether you have SAD as op- Also, when you’re indoors, keep your exercise, and the help posed to some other form of depression. blinds open to let as much natural light in of a professional. If you have SAD, therapy can help as you can. You want to be in bright envi- you work through it. ronments whenever possible Consider Antidepressants Be Proactive If light therapy or psychotherapy does not sufficiently Proactive is the way to go. boost your mood, prescription antidepressants may help As it does with other forms of depression, exercise can you overcome seasonal depression. But avoid medications help alleviate seasonal affective disorder, too. Outdoor ex- that might make you sleepy. Some people think it’s only ercise would be most helpful. But if you can’t exercise out- necessary to take antidepressants when they’re feeling the side because it’s cold, choose a treadmill, stationary bike, blues, but they must do so every cold season. or elliptical machine close to a window at the gym. It’s important to recognize when the symptoms of SAD Exercise can also help offset the weight gain that is com- start, and to see your doctor for a prescription before they mon with seasonal affective disorder. escalate.

Add Aromatherapy Wambui Waruingi Aromatherapy may also help those with seasonal dis- is a Journalist, Creative Content Creator and Wellness Blogger. | E-mail: ruthwambui@gamil. order. The essential oils can influence the area of the brain com that’s responsible for controlling moods and the body’s in- ternal clock that influences sleep and appetite. You can add a few drops of essential oils to your bath at night to help you relax. issue no. 090 March 2021 Management Magazine 47 management | OFFICE DIARY

we fly around in circles). Meetings: Work? Or Why are we so afraid of making decisions? Are we paralysed by corpo- just a waste of time? rate governance restrictions? Are we carried away by democratic ideology Decision-free zones are drains on or politically correct consultation? Are productivity. we just too scared to do something when there’s a chance that it could be wrong or fail? Ironically the more we By Jackie Mukami discuss (and don’t decide and act) the slower we react, the less responsive Are you lonely? Bored? Nothing to else to think about. About the only we are to the environment and the do? Well... no problem, just call a thing worse than this is the “Extended more we put the business at risk. meeting! You’ll get to sit around with Parktown Prawn”, a regular get to- “ What goes wrong ... and can we your mates, get coffee brought to you and gether where the majority of the time make it right? discuss nothing of any consequence. Best is spent re-discussing what was dis- of all, you don’t have to do any real work cussed at the last meeting. All we do is “talk talk” and before you know it, it’ll be time to It’s not surprising that in a Microsoft Only 12% of executives believe that head home.” survey of 38 000 people across the their top management meetings con- I remember this poster from my ear- globe inefficient meetings topped the sistently produce decisions on import- ly days and lately it has been playing list as the biggest waste of time, and ant strategic or organisational issues. in my head like an irritating, albeit rel- the most destructive force in terms of Making the decision the starting point evant, ABBA “song worm”. employee morale and productivity. of the meeting via a decision agenda It seems like meetings have become as opposed to a discussion agenda fo- the holding pattern of corporate life - The missing ingredient cuses the meeting towards a well-con- a safe, decision-free zone to hang out Despite all of the above, it’s not the sidered decision that will result in in, ironically at a time when we des- idea of the meeting that’s the problem. action. perately need to land and tackle some Getting a whole lot of people together very pressing issues. to express their ideas, voice their opin- Sloppy follow through Sitting through a particularly mind ions or share facts is a good one. The In the (potentially unlikely) event numbing meeting recently gave me missing ingredient is a decision that of a decision, making it stick is often the opportunity to reflect on the big- results in action. Decision-making a bridge too far. There are as many gest culprits - the meetings that we comes right back to the leadership interpretations as meeting delegates. all dread but grin and bear in equal and strategy arena. Meetings sans an Communication (or often non-com- measure, the ones that give all other outcome or a decision are best de- munication) to the rest of the compa- meetings a bad name. scribed by my opening quote. They ny may be inconsistent and uncoordi- First to mind is the “It’s that time of are an undemanding waste of time nated. Taking time to explicitly agree the month/week/day/quarter”. We and an incredibly frustrating drain on on “what we have decided” and then get through these only with smart- productivity. specifying the resources (time, talent, phones or laptop lifelines to alleviate money) needed and the outcome ex- the boredom. I know it’s an old joke Not deciding is also a “decision” pected, will make a difference. but for those that have to sit through “Decidere” is Latin for “cut off”, The bottom line is if a meeting so-called “Bored” Meetings... it must in other words - choice. A leader that doesn’t feel like real work, we have to have crossed your mind! cannot choose where to allocate re- ask ourselves - isn’t there something The chart topper is an abomination I sources is not a leader at all. He/she is better we should be doing with our call the “Parktown Prawn”. The good advertently or inadvertently putting time? old “thanks everyone” just doesn’t the company into a holding pattern, cut it. There’s always another com- which in itself is a choice (think of all Jackline Mukami is the Editor, ment, another viewpoint, something the resources that are wasted while Management Magazine. |E-mail: jmu- [email protected]

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Head O ce - 0719 054 101 Nyahururu - 0712 201 583 Kisii - 0712 201 007 Thika - 0712 212 914 Narok - 0712 201 561 Kakamega - 0712 199 925 Kisumu - 0712 199 843 Machakos - 0712 200 768 Nakuru - 0712 200 916 Utawala - 0791 399 053 Embu - 0712 201 565 Mombasa - 0712 200 954 Nanyuki - 0712 201 512 Meru - 0712 201 013 Naivasha - 0712 200 934 Kitengela - 0790 484 647 Kericho - 0712 201 574 Nyeri - 0712 201 088 Nairobi - 0722 200 864 Eldoret - 0712 200 805