BUSINESS PLAN FOR 50 LOW – INCOME HOUSES

AT YATTO – DOUALA

EXECUTION DURATION – 2YEARS

Executive Summary

Population growth in Cameroon is very steady and makes access to housing very difficult over
time. Cameroon has a gap in its urban housing demand with estimated deficit of about 1.2
million low-income housing units. The demand for low-income housing continues to grow
especially in the cities of Yaoundé and Douala due to industrial location and the influx of people
from the crisis hit Northwest and Southwest regions of the Country and the annual population
growth rate which stands at 2.6%. Douala in particular has additional pressure due to the
prevalence of many companies that act as a population pull factor. This deficit makes investment
in this sector to be lucrative investment opportunity as the existing gap is very wide and
continues to grow. The demand for low-cost housing is far above supply making any investment
in this sector secured. Access to housing finance is very low and selectively available as only about
5percent of the population have access to mortgage finance from the banking sector as only 2% of
Cameroon's land is registered and concentrated in urban areas. Property developers sort local and
foreign partnerships to finance these investments. A project such as this, that stands to remedy this
social problem is welcomed by the government of Cameroon.

Company Overview

This initiative intends to make a remarkable contribution in real estate development over the long

time. By phasing development in this domain. The first target is to construct 50 low-income

houses at Yato as a response to the growing demand for low - income houses in the area. This

location has been selected due to the identification of a vast and suitable land. Yato is Located in

the mungo division littoral region of Cameroon about 15km from Douala that has attracted

industrial settlement due to the need to decongest the city of Douala. Within the past few years

Yato has attracted several companies such as CAMWATER, CAPAC, AGAPE GROUP,

SOPROICAM, OLAM AGRI. The presence of these companies and many internally displaced

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persons accounts for the growing demand for low-income houses at Yato. The inhabitants of

Yato face serious difficulties due to high rents because the demand for housing has been

growing steadily. Companies’ staff lack houses to stay because the number of available houses

is small compared to the recent population influx.

This project will increase the availability of the low-cost to accommodate staff of companies in

the area who have always anticipated to live.

Industry Analysis

Many Cameroonians have not taken steps to grasp the opportunity that exist in this sector and

accounts for the huge gap in the supply of low-cost houses in Cameroon as more than 70% of

the population does not have access to a housing of good quality despite vast public policy

programmes aimed at supplying low-cost houses. Real estate sector in Cameroon offer a lot of

opportunities for investment since the housing demand has recently increased. The dominant

participant in the sector is the real estate Company (SIC).

Customer Analysis

The target customers for this business is the staff of several companies that are located at Yato,

population influx due to migration exist a close proximity of the proposed project site and the

target customers. This direct contact is an added advantage. A website will be created where

vacant houses will be posted and through which the houses will be advertised and management

contacted. The problem of non-repayment of rents will be controlled by implementation of

annual rents payment policy.

Competitive Analysis

Yato has no public company operating a real estate business at the moment. Only few
commercial buildings exists that are owned by few private individuals. The few houses are

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constructed in clusters and this still makes the supply gap to be constant and the available houses
are mostly single rooms that cannot accommodate a family setting and not suitable for majority
of the target population. Therefore, the mission of this business in unique as it intends to
construct houses that will be of lower cost and able to accommodate family settings as expressed
by the needs of companies staff.

Marketing Plan

The proposed house type is 3bedrooms parlor, kitchen and toilet required by family settings and
of a low cost nature that can be within the reach of the target population that will contain all
required utilities and of modern standards. In this way, the houses will be able to stand future
competition and guarantee the retaining of tenants. The Social Media Marketing will be the main
method where inquiries from prospective tenants will be placed and adverts for available houses
posted. In this way, middle men that often inflate rents will be eliminated. The evaluation of the
property will be done periodically can tenants will be liable for any damage so as the ensure a
careful use of the property.

Operations Plan

This initiative is to be achieved through a legalized partnership relationship in order to keep the
partners liable and to solicit the necessary finances for the project. The major strength is the
availability of land secured for this purpose, and previous involvement in the sector. The mission
to construct 50 low-cost houses as the first phase of the initiative will be split in to yearly targets
of 25 houses per year with a target to achieve the 50houses within 2years.

Tentative projections of the project cost is as follows:

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 YEAR1
S/No Cost Costing Quantity Cost per Cost of 25
Description Parameter Projection Apartment
Apartments
1 Land 8000 frs per 100m2 Per 3 800,000 20,000,000
acquisition meter square room

apartment
2 Building Construction Cost in of 3 bedroom 12,000,000 300,000,000
Construction apartment in Cameroon
3 Legislative cost 1% of Building Cost 120,000 3,000,000
SUB Total YEAR1 12,920,000 323,000,000
YEAR 2
S/No Cost Costing Quantity Cost per Cost of 25
Description Parameter Projection Apartment
Apartments
1 Land 8000 frs per 100m2 Per 3 800,000 20,000,000
acquisition meter square room

apartment
2 Building Construction Cost in of 3 bedroom 12,000,000 300,000,000
Construction apartment in Cameroon
3 Legislative cost 1% of Building Cost 120,000 3,000,000
SUB Total YEAR2 12,920,000 323,000,000
GRAND TOTAL COST 646,000,000
Life span 50years

Management Team

The facilitator of this initiative has been a dealer in real estate for more than a decade. The vast
experience has made readily available required knowledge in the dynamics and management
concerns of real estate business. Also, the existence of reputable construction workers at his
disposal is also a plus. To say the least, management is well equip in terms of knowhow,

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 experience and personnel to execute, and run real estate projects from site study, architectural
designing, construction and control. The team is receptive to innovative ideas and open to
embrace new challenges.

Revenue Projection (monthly rent = 200,000)

Gross Provision Annual Tax Net Annual No of Total

Annual Rent for Expenses income per Apartments Income

Per Depreciatio Per Apartment in year2 (fcfa)

apartment n Apartment (fcfa) (No)

(fcfa) Rate of 5% (fcfa)

Year 1 0 0 0 0 0 0 0

Year 2 2,400,000 996,000 200,000 397,320 806,680 25 20,167,000

Year 2,400,000 996,400 200,000 397,320 806,680 50 40,334,000

Year 2,400,000 996,400 200,000 397,320 806,680 50 40,334,000

Year 5 2,400,000 996,400 200,000 397,320 806,680 50 40,334,000

Year 21 2,400,000 996,400 200,000 397,320 806,680 50 40,334,000

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Total 93,600,000 19,928,000 4,000,000 7,946,400 16,133,600 50 786,513,000

Pay Back Period = 16years 6 days

Appendix

 Life span of Building 20 years

 Depreciation calculated at flat rate 5% considering that cumulative depreciation

will be used for building maintenance

 No provision for future inflation

 Tax 33% of Net Annual rent