Papaf Mwenyewe
September 27th, 2009, 12:35 AM
City landlords dump executives for cash-hungry small traders
Updated 1 hr(s) 48 min(s) ago
Related Stories
By Kenfrey Kiberenge
Many buildings in Nairobi’s downtown have been transformed into exhibition stalls, as landlords rush to cash in on booming business.
The owners charge tenants a fortune as goodwill, ranging from hundreds of thousands to millions of shillings. Initially the goodwill, which refers to the value of a business over and above its tangible assets, was supposed to be for old businesses being sold to new operators.
However, this has taken a new dimension in Nairobi, where new business premises are attracting huge sums as goodwill.
And the prices of letting space in downtown Nairobi (Tom Mboya Street, River Road and Kirinyaga Road) has increased, rivalling prices in uptown.
At one of the buildings along Accra Road, which used to house a hotel and a music shop but has been transformed into an exhibition centre, goodwill for a 10ft by 10ft stall stands at Sh3 million and Sh60,000 monthly rent.
"Only two are left," said a caretaker.
At another building , the goodwill is Sh600,000 and rent is Sh40,000. The charge is for a building that has no lifts, adequate water supply and toilet facilities.
No Goodwill
For an office in Upper Hill, which has facilities such as toilets and kitchens, secure parking, standby generator, high speed lifts, alternative water supply, solar reflective windows with ultraviolet protection, among others, the cost is Sh45 per square feet — and no goodwill.
But the demand is so high that Kenyans are spending a lot of money to book stalls way before they are ready for occupation.
This demand has seen several old buildings, which a few months ago served as dens for street families, refurbished and stalls constructed.
At least two buildings that hosted branches of a local supermarket have been partitioned into stalls, while some businessmen have been replaced by the new business models.
At one of the locations, we were informed, the building that used to house a cafe was consumed by fire and two days later, construction of stalls commenced.
Ms Mercy Kanini says she had hoped to start a small business in downtown Nairobi after securing a Sh150,000 loan.
"The loan is not even a fraction of the goodwill," said Kanini, after being informed her preferred stall would require Sh3 million as goodwill.
Mr Lloyd Matunge says he paid Sh600,000 as goodwill for a 10ft by 10ft stall towards the end of last year, thinking he could recoup the money immediately.
"I am paying Sh40,000 monthly and I incur occasional losses. I am thinking of moving away and asking for a goodwill of Sh800,000 because that is the only way I can get my money back," he said.
Despite the madness, the Government’s hands are tied. Mr Maina Kirori, a member of the Business Premises Rent Tribunal (BPRT), says the tribunal mandated to offer legal protection for tenants cannot rein in unscrupulous landlords since the current law does not empower them to intervene when there is an informal ‘arrangement’ prior to occupation.
Unable to act
"The goodwill is asked for before that relationship is established so we cannot do anything about it," he explained.
But on the Ministry of Trade website, BPRT says it functions include assessment of rent, alteration of tenancy, termination of tenancy, re-possession of business premises by landlords and distress for rent by landlords.
Nevertheless, all is not lost. Kirori said tenants who want to leave the premises and want their goodwill back could seek the intervention from the tribunal.
"The tribunal is established by an Act of Parliament called Land Lord and Tenant (Shops, Hotels and Catering Establishments) Cap 301 of 1965 and it seeks to protect tenants more than the landlord," he said.
While terming the goodwill ridiculous, Nairobi Central Business District Association Chairman Timothy Muriuki defended landlords, saying high prices is due to supply and demand forces.
"It is true that the goodwill is high but the stalls are in very high demand. Businesspeople consider things like location, security and customer flow and if they feel they can make returns, then the goodwill is not an issue," said Muriuki.
He, however, concedes high goodwill makes business platform in the city uneven but rules out Government control since the charges vary from one building to another.
"The Government should not come up with rent controls because they are not in-charge of supply," he said.
He added that decentralising business to other parts of the city would be the ultimate solution.
Source http://www.standardmedia.co.ke/news/InsidePage.php?id=1144024993&cid=159&
Read all about: traders exhibition stalls Nairobi
Updated 1 hr(s) 48 min(s) ago
Related Stories
By Kenfrey Kiberenge
Many buildings in Nairobi’s downtown have been transformed into exhibition stalls, as landlords rush to cash in on booming business.
The owners charge tenants a fortune as goodwill, ranging from hundreds of thousands to millions of shillings. Initially the goodwill, which refers to the value of a business over and above its tangible assets, was supposed to be for old businesses being sold to new operators.
However, this has taken a new dimension in Nairobi, where new business premises are attracting huge sums as goodwill.
And the prices of letting space in downtown Nairobi (Tom Mboya Street, River Road and Kirinyaga Road) has increased, rivalling prices in uptown.
At one of the buildings along Accra Road, which used to house a hotel and a music shop but has been transformed into an exhibition centre, goodwill for a 10ft by 10ft stall stands at Sh3 million and Sh60,000 monthly rent.
"Only two are left," said a caretaker.
At another building , the goodwill is Sh600,000 and rent is Sh40,000. The charge is for a building that has no lifts, adequate water supply and toilet facilities.
No Goodwill
For an office in Upper Hill, which has facilities such as toilets and kitchens, secure parking, standby generator, high speed lifts, alternative water supply, solar reflective windows with ultraviolet protection, among others, the cost is Sh45 per square feet — and no goodwill.
But the demand is so high that Kenyans are spending a lot of money to book stalls way before they are ready for occupation.
This demand has seen several old buildings, which a few months ago served as dens for street families, refurbished and stalls constructed.
At least two buildings that hosted branches of a local supermarket have been partitioned into stalls, while some businessmen have been replaced by the new business models.
At one of the locations, we were informed, the building that used to house a cafe was consumed by fire and two days later, construction of stalls commenced.
Ms Mercy Kanini says she had hoped to start a small business in downtown Nairobi after securing a Sh150,000 loan.
"The loan is not even a fraction of the goodwill," said Kanini, after being informed her preferred stall would require Sh3 million as goodwill.
Mr Lloyd Matunge says he paid Sh600,000 as goodwill for a 10ft by 10ft stall towards the end of last year, thinking he could recoup the money immediately.
"I am paying Sh40,000 monthly and I incur occasional losses. I am thinking of moving away and asking for a goodwill of Sh800,000 because that is the only way I can get my money back," he said.
Despite the madness, the Government’s hands are tied. Mr Maina Kirori, a member of the Business Premises Rent Tribunal (BPRT), says the tribunal mandated to offer legal protection for tenants cannot rein in unscrupulous landlords since the current law does not empower them to intervene when there is an informal ‘arrangement’ prior to occupation.
Unable to act
"The goodwill is asked for before that relationship is established so we cannot do anything about it," he explained.
But on the Ministry of Trade website, BPRT says it functions include assessment of rent, alteration of tenancy, termination of tenancy, re-possession of business premises by landlords and distress for rent by landlords.
Nevertheless, all is not lost. Kirori said tenants who want to leave the premises and want their goodwill back could seek the intervention from the tribunal.
"The tribunal is established by an Act of Parliament called Land Lord and Tenant (Shops, Hotels and Catering Establishments) Cap 301 of 1965 and it seeks to protect tenants more than the landlord," he said.
While terming the goodwill ridiculous, Nairobi Central Business District Association Chairman Timothy Muriuki defended landlords, saying high prices is due to supply and demand forces.
"It is true that the goodwill is high but the stalls are in very high demand. Businesspeople consider things like location, security and customer flow and if they feel they can make returns, then the goodwill is not an issue," said Muriuki.
He, however, concedes high goodwill makes business platform in the city uneven but rules out Government control since the charges vary from one building to another.
"The Government should not come up with rent controls because they are not in-charge of supply," he said.
He added that decentralising business to other parts of the city would be the ultimate solution.
Source http://www.standardmedia.co.ke/news/InsidePage.php?id=1144024993&cid=159&
Read all about: traders exhibition stalls Nairobi