By Ibrahim Mwathane
In their write-ups, some few deep thinkers had predicted an eventuality where the world and its economy could shut on account of some viral attack. But ordinary minds, even in their wildest thoughts, wouldn’t have imagined the manner and scope in which such phenomenon could strike global space. When coronavirus began spreading from Wuhan City, China in December 2019, most of us were bemused to see men and women spotting face masks everywhere they went. The sight of health professionals in hazmat suits attending to coronavirus patients looked unreal. We would speak about the virus and its devastating consequences during our local banter hilariously.
Change in lifestyles
But when the government made a formal announcement of the first case of coronavirus disease in mid-March, life changed totally. An overwhelming sense of helplessness prevailed in Kenya, particularly in urban areas. Life ceased to be normal, with everyone minding their health condition, and restricting their movements guardedly. Nearly all social-economic activities were disrupted. Those with access to objective information had some general idea about the severity of what lay ahead. But most Kenyans had little idea about the gravity of the consequences that the virus would spell to their lifestyles and businesses. Learning institutions were shut. Movement in the main economic hubs of Nairobi and Mombasa was restricted. A countrywide curfew on night movements and activities was slapped. Public spaces and most offices were shut, and people encouraged to work from home. For over half a year, this situation persisted.
In late September, President Uhuru Kenyatta announced the partial opening up of the economy. This has been closely followed by an announcement for the phased reopening of learning institutions. Consequently, it is anticipated that most productive units will gradually restart the business. But the impacts, and the fact that we will now have to get used to living with the coronavirus, has had a most fundamental impact on doing business in the future. So what have been the lessons to land governance institutions, professionals and service consumers in Kenya, and what changes may these portend forwards?
Given that ordinarily, this Ministry is prone to crowds of service seekers in its Head office and most of its land registries, a notice to close its doors to routine customers was issued by the Cabinet Secretary Farida Karoney soon after the announcement of the first coronavirus case in Kenya. But seed staff to attend to cases of an urgent nature such as court orders and discharge of charges was retained. The Survey of Kenya Headquarters at Ruaraka, a very vital source of data for practicing surveyors, was closed too. Such closure notices would continue to be renewed alongside the national announcements for extension of movement restrictions as the national caseload of coronavirus cases rose. Concerns about the associated loss of business continued to be expressed by some stakeholders.
Extended closure of Lands offices
Over the extended period of closure, land sector professionals, along with landowners and developers with pending transactions and development applications, suffered substantial loses. It is noteworthy that the pandemic struck just as the Ministry was upping its efforts in digitizing land records in preparation for the roll-out of a land information management system. If well designed, such a system would be able to support the technical sub-systems in planning, land allocation, planning, cadastral surveying and land registration. These sub-systems would therefore need to support the input and dissemination of digital data and products.
One key lesson, therefore, remains that the Ministry needs to expedite the development of this system and to be prepared to be receiving digital records from respective sector professionals, and also to provide online off-site information and products to service seekers around the country. Developers of the system should therefore think long term and accommodate scenarios where the country can close in the future. Such a system would render online services to consumers regardless.
Figure 1: Public Notice on Closure of Lands Offices (Source: Ministry of Lands and Physical Planning)
While profiling the vulnerable, the Ministry of Health would always include citizens aged 58 years and above. Unfortunately, some senior professionals in the Ministry fall within this bracket, or are just about to. Indeed, when such professionals were required to work from home, one would suspect that there may have emerged some capacity gap in some offices. In planning its staff needs, the Ministry will need to project carefully to ensure that such vulnerability is accordingly addressed.
The Ministry too needs to address itself to any backlogs that may have accumulated on some service desks, in its Head Office at Ardhi House or in the Counties, and ensure that strategic measures are taken to deal with it gradually.
The National Land Commission is charged with the management of public land on behalf of the national and county governments. While the Commission never publicly announced any office closure, it too was affected alongside other national institutions. So when the government advised all staff aged 58 years and above to work from home, this applied and affected performance of the Commission too. Furthermore, restrictions in movements, and in accessing public spaces, also kept some service seekers away from Commission offices. Notably, a number of Commission interventions call for public meetings to listen to public complaints or disseminate key messages. Such meetings could therefore not be effectively held and Commission business in this regard suffered. As a result, it is anticipated that some of the Commission delivery timelines have been adversely affected.
In way of learning and responding to lessons, it would be expected that the Commission establishes systems that provide alternative online services to its routine customer. It will also have to be innovative on matters that call for stakeholder and public meetings. This includes holding such consultative forums and public meetings virtually. Without this, a surge in corona virus attacks, or similar pandemics in future, would further undermine Commission business.
The real estate industry in Kenya suffered a major hit. Ordinarily, returns on residential and commercial stocks are pegged to monthly rental incomes. These are drawn from the occupants to the respective units. A majority of the residential and commercial unit tenants service monthly rental demands from their monthly salaries or monthly incomes from their businesses. The cessation of movements, the application of curfew and the closure of offices and production lines therefore made it difficult for tenants to service their monthly rental commitments.
Three things subsequently happened. Some tenants pushed for a revision of rental rates, and were granted, this reduced returns on the affected investments. In other cases, unable to pay, some tenants defaulted on their rents, occasioning extra costs of management, as property managers sought to enforce payments, procure services of auctioneers to redeem arrears, or to determine lease agreements altogether. In severe cases, tenants just moved out without notice on realizing that they couldn’t pay.
Some took up cheaper options while others either closed businesses or moved to their rural homes on losing jobs. The net effect has been decreased earnings on investments, with increased risks where initial investment capital was tied to borrowed funds.
Working from home and consequences
The “work-from-home” call by the government saw many private sector institutions, which are key consumers of the commercial property space available in urban areas, make arrangements to work from home. Many went to extra lengths to establish protocols where senior and middle-level management meetings, staff consultations and briefs were done virtually. While a business may not have been optimal, this experience revealed some dividends. These include time saved in travel and reduced service costs in aspects such as cleaning and the consumption of water and power. Most importantly, the experience revealed that some institutions could actually do with less office space than they occupied. It is therefore expected that some of these may gradually release some of their extra space, while others, such as professional consultants and practitioners, may abandon rental office space altogether. Such possibilities should inform actors in our real estate market.
The departure of foreign citizens
One will also recollect that Kenyans in various countries sought to return, either because they had lost jobs, or anticipated heightened risks given that citizens in the countries they lived in were retreating to their respective homes as advised by governments. The reverse happened here. Some foreign nationals working here decided to live. Most of these occupied high end residential flats and bungalows. Therefore, some owners and managers to this premium segment of the market suddenly found themselves with vacant stock, which has not been easy to let out in today’s depressed economy.
Accommodation in University “suburbs”
The recent expansion in higher education institutions had a corresponding effect in the demand for accommodation around the institutions. This has been particularly so for Universities, whose enrollment numbers have been on a sharp rise. A few Universities will help to illustrate: Jaramogi Oginga Odinga University (Bondo, Siaya); Maasai Mara University (Narok); Cooperative University (Karen); Jomo Kenyatta University of Agriculture and Technology (Juja); University of Embu (Embu) and Chuka University (Tharaka-Nithi). Due to their rapid growth and increase in student and staff numbers, such Universities have seen investors move in to construct multiple blocks of high rise flats, permanent/semi-permanent single-room units or stand-alone bungalows that are let out to groups of students.
In some cases, some developers have constructed blocks of flats exclusively tailored for students. Some consist of single-room units served by common external washrooms strategically located on the various floors. With Universities closed, students moved out. Some completely! Other students teamed up and rented out a room or house in which they dumped their belongings and left, hence tremendously reducing their monthly rental load. Instead of paying for a room each, they would contribute to their collective fund and pay a very small fraction of their previous rent.
Figure 3: Maasai Mara University
The net effect of these shifts has been a major reduction in the monthly rental incomes from such investments. It has been a lot worse for investors who had tailored their units exclusively for student occupation. Regular tenants, particularly those with families, have given such facilities a complete pass. So they stand vacant for all the months. It therefore behooves developers and real estate consultants to take necessary lessons. One does not know what other incidents could lead to the closure of Universities or other institutions that have attracted real estate investments in support of accommodation. So the construction of such blocks or bungalows should factor a wider consumer profile.
Owner-occupied residential and commercial premises
A key lesson from the pandemic has been that monthly rental commitment, be it for residential or commercial space, can subject consumers to the sudden loss of a home or office, once monthly income from employers or businesses is interrupted. With restricted travel, consumer patterns interrupted and some offices closed, jobs and regular incomes were lost. Therefore, tenants dependent on salaries, and entrepreneurs dependent on business incomes, found themselves unable to pay rent.
With such experiences, some of these have resolved to go out of their way to move into owner-occupied residential houses and offices which are more sustainable in the event of interrupted earnings. Options include the purchase of affordable land in the urban peripheries and construction thereon, purchase of units in the ongoing government low-cost schemes, the purchase of office space through sectional property arrangements, or the conversion of wings of owner-occupied residential spaces into offices. The market should beware of this likely trend, and prepare to harness emerging opportunities.
As observed above, this group, which includes surveyors, lawyers, planners, valuers and estate managers, has been lately exposed to the opportunity of working from home. And they now know the associated time and cost savings. For some, there was the extra dividend of working from their serene spaces. Peaceful, quiet and most enabling while handling tasks that call for deep, reflective and uninterrupted moments.
Such professionals may never recommit to the daily routine of life back in offices and may shed or reduce space. They had to be innovative to cope with data needs, applications for development, submissions to lands offices, liaison with colleagues and clients. Most now appreciate that the future will be one-space, including e-correspondence, e-transactions, e-applications, and e-purchases of data and products. They are therefore likely to continue to put the government under pressure to upgrade existing manual systems and service lines to support remote digital data upload and requests. The government should take good note and prepare for this e-future. Training institutions should beware this imminent transition and customize some short courses to help wean some of the practicing professionals of their analog past in preparation.
Ibrahim Mwathane is a practicing Licensed Surveyor and a consultant in land governance, a past Chairman of ISK, a Fellow member of the Institution of Surveyors of Kenya and a holder of Head of State Commendation Awards (2005 and 2009). He is currently the Chair of the Land Development and Governance Institute and a columnist with the Business Daily newspaper.