Kenya leads East Africa in upmarket retail space
Out of South Africa, Kenya registered the biggest growth in volume of modern retail space in Sub- Saharan Africa in the last two years, and the Kenyan capital Nairobi continues to be a development hotspot for retail business real estate.
According to the Knight Frank 2017 report, between 2015 and the first quarter of 2017 alone, of the 12 biggest retail space malls that opened their doors to business anywhere in Africa, three were in Nairobi. Moreover, all the three were among the biggest four.
The biggest of the top four was South Africa’s Mall of Africa, that opened in June 2016, marshalling in 131,000 square metres of retail space. Located in Gauteng, the Mall is now home to some of the biggest retail big wigs in South Africa- and in the continent- like Woolworth, Game, Checkers, Edgars.
Coming in second, third and fourth places respectively in terms of space size, were Nairobi’s Two Rivers Mall with 67,000 square metres (opened February 2017), Garden City (phase one) at 33,500 square metres of space (opened April 2015) and The Hub at 30,000 square metres (opened in February 2016).
This means that within a time space of 2 years, Nairobi opened for business nearly 100, 000 square metres of retail space. What is also interesting about Nairobi’s retail real estate development is that unlike Kampala, Kigali and Dar es Salaam where investment in malls is undertaken by small individual investors, Nairobi is attracting big money from investment companies like Actis, Centum, Aspire, among others.
This means that these developments are done based on real socio-economic projections rather than mere perceptions.
Kenya is increasingly becoming an attractive destination for big consumer retail outlets. This can be attributed to the growing Kenyan middle class, its attractiveness to international organisations and strategic location in East Africa, making it the region’s economic powerhouse.
According to Knight Frank, “large volumes of modern retail space remain in the pipeline across Sub-Saharan Africa, although the weakening of the oil-driven economies has led to the postponement or scaling down of some projects in these countries. With most of the region’s major capital cities now having at least one modern mall, developers have increasingly targeted secondary cities in order to gain first- mover advantage in these locations. “
The report adds that, “There are also signs that pragmatic developers are now concentrating on the delivery of well-located small and medium-sized convenience shopping centres rather than regional mega-malls.”
Knight Frank anticipates that “as the sector grows and competition between retail schemes intensifies, developers will seek to differentiate their malls by offering access to international brands, leisure facilities and upscale consumer experiences. Selecting the right micro-locations for development will be crucial to the success of new centres, particularly in cities that already have successful existing malls. Modern mall development will play a major role in shaping the future landscapes of Africa’s growing cities.”