The Sectional Properties Act, 2020 (SPA) marked a significant shift from its predecessor, the Sectional Properties Act, 1987 in regulating management of sectional properties. One distinction between the two statutes lies in the governance structure, with the SPA mandating the formation of a corporation.
Real estate has emerged as an attractive long-term investment for investors seeking diversification and stable yields in an uncertain economy. As a sector, real estate must both compete with other investment classes and offer a desirable product to end-users whether they are buying or leasing.
IKM acts for property developers, owners of commercial buildings, individuals, lenders, investors and all other groups active in the property industry.
The firm advises clients on all legal issues related to this sector, including: the purchase and sale of property, leasing and subleasing, land use, joint ventures, construction, tax advice, environmental regulations, planning and development, financing, real estate investment trusts and dispute resolution.The firm also has expertise in the preparation of wills, probate and estate planning.
Experience has included advising:
- A real estate company on a multiphase apartment development project in Kiambu County. The transaction involved the transfer of the land, preparing the offer letters, agreements for sale and leases, carrying out a change of user, registration of partial discharges and leases and the incorporation of a management company
- A Fortune 500 energy company in the setting up of a proposed wind energy project in Kajiado County
- Executive Properties Limited, a property development company, on the structure and legal framework of a development of 176 residential maisonettes, 72 apartments and a nursery school in Nairobi
- A client on remedial actions to be taken to ensure that third parties could not challenge the ownership of their land
- Hua Xiang Development Limited, a property development company, on the structure and legal framework of a development of 48 residential apartments in the up-market area of Lavington, Nairobi
- In a due diligence review exercise on the instruction of the National Oil Corporation of Kenya Limited. This was in relation to the purchase of various assets (including petrol stations and undeveloped property consisting of 24 parcels of land) from Somken Petroleum Company Limited. The exercise involved preparing the relevant due diligence questionnaire, perusing the documents provided by Somken, conducting relevant searches and preparing a legal due diligence report
- A leading investor in connection with an expansion plan of its integrated mixed-use development comprising a hotel with 250 rooms, a mall and offices, including preparing all agreements relating to project construction, retail shop leases, and advising on the overall corporate and management structure to ensure the intended mixed-use development is achieved
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A leading global manufacturer of consumer products in relation to the development of a manufacturing plant in Kenya. The transaction involves the purchase of approximately 70 acres of land. IKM assisted the client in identifying the most suitable parcel of land to be acquired for the manufacturing plant including: reviewed and negotiated the terms of sale of the property, advised the client on the necessary permits required in respect of the manufacturing plant, and advised on change of user of the property in light of the intended mixed-use development. The brief also involved registering transfers at the land office.
- A Chinese corporation client on the acquisition of various properties in Nairobi for purposes of construction of luxury office and apartment complexes. The transactions involved: carrying out due diligence on the properties at the relevant land registries and survey offices, confirming with the local authorities the permitted use of the properties, preparation and negotiation of the terms of the sale agreements, preparation and registration of transfer documents, finalization of titles in the name of the client, and post-registration due diligence
- A leading school in the sale of a portion of its property for USD11.23 million. The transaction involved co-coordinating the subdivision and change of user of the property, drafting and negotiating the terms of the sale agreement, and ensuring that the client was satisfied with the conditions set out in the agreement
- Ranked in Real Estate (Chambers & Partners 2019)
- Ranked in Real Estate (The Legal 500 2018-2019)
It is now one year since the implementation of the Finance Act, 2022. Capital Gains Tax (CGT) has since 1 January 2023 been charged at a rate of 15% up from 5%. This may be a timely juncture to assess the overall effect of the increased CGT.
In May 2023, the Senator of Trans Nzoia County, Senator Allan Chesang sponsored the Real Estate Regulation Bill (Bill), which is currently under consideration by Senate. The Bill draws heavily from the Indian Real Estate (Regulation and Development) Act of 2016 (RERA), which regulates India’s real estate and property market. Kenya’s real estate market is estimated by Statista to be worth USD 7.91 Billion is dwarfed in comparison to global giants like India’s USD 265.18 Billion market. While the two countries’ real estate sectors differ significantly in size, they seem to share common concerns: the need for a specialised legal framework to protect real estate consumers.
Inflation rates in Kenya have steadily increased impacting the cost of living. One of the sectors affected is the real estate sector where inflation has resulted in increased construction costs, property values, rent and other operational and maintenance costs such as service charge
Barely five months since the landmark decision of the Supreme Court in Dina Management Limited v County Government of Mombasa & 5 others (Petition No. 8 (E010) of 2021), the apex Court on 22 September 2023 delivered another judgment which has the potential to further shake up the process of purchase of land by property investors in Kenya. In a judgment delivered in the case of Petition No. 5 (E006) of 2022; Torino Enterprises Limited v Hon Attorney General (“Torino Enterprise Limited’s case”), the Supreme Court held among other things that a letter of allotment, even if perfected, cannot by and in itself confer transferable title to the Allottee, until the purchasers are registered as proprietors of the land upon perfecting the letter of allotment. The Supreme Court further placed a burden to land purchasers to do a physical site visit for verification of land which the purchasers intend to buy.