Delayed road works hit Upper Hill office occupancy
An incomplete road in Upper Hill, Nairobi. Construction of the 5.4km stretch serving the commercial district has dragged on since May 2012. FILE PHOTO | JEFF ANGOTE |
What you need to know:
Delayed completion of road works in Nairobi’s Upper Hill has resulted in a 90 per cent drop in uptake of office space, a report by property firm Knight Frank says.
The low uptake of office space in other areas is attributed to a slowdown in completion of office projects.
Westlands remains the most lucrative rental area with average rent at Sh1,320 per square metre ($15) followed by Upper Hill at Sh1,144 ($13).
Delayed completion of road works in Nairobi’s Upper Hill has resulted in a 90 per cent drop in uptake of office space, a report by property firm Knight Frank says.
Sale of office space in Kenya’s capital city dropped by six per cent in the three months to June compared to the January to February period with Upper Hill the worst hit.
“This has mainly been attributed to the ongoing road and infrastructure works that are hampering development,” says the report.
Construction of the 5.4km stretch serving the commercial district has dragged on since May 2012 when the contract was awarded to Mattan Contractors.
The area’s infrastructure including water, sewerage and electricity have been affected by the road works covering Hospital, Elgon, Kilimanjaro, Bunyala, Mara and Upper Hill roads.
The low uptake of office space in other areas is attributed to a slowdown in completion of office projects. No notable commercial office completions were witnessed in the quarter, says Knight Frank.
Offices under construction include the 30-storey Britam, 31-storey UAP Building and Mwalimu National Sacco Building with 17 storeys.
Westlands remains the most lucrative rental area with average rent at Sh1,320 per square metre ($15) followed by Upper Hill at Sh1,144 ($13).
The average rent in Kilimani is Sh1,056 and Sh880 in the Central Business District. Data shows only Upper Hill rates remained stagnant last year.
Real estate agents estimate demand for office space at 1.3 million square feet with the average demand at 8,000 square feet.
Demand for office space has been on the rise as more international firms seek to set up regional hubs in Nairobi. Upper Hill has been attractive to businesses looking to avoid human and traffic congestion in CBD.
Institutions of higher education have been the main beneficiaries of the exodus by companies from CBD as they have used the space to conduct evening classes.
The prime area hosts the World Bank country offices and headquarters of Britam, Equity Bank, Commercial Bank of Africa and the Teachers Service Commission.
Some of the recently completed commercial projects elsewhere include Watermark Business Park on Lang'ata Road retailing at Sh140 per square feet, Oval Ring Road at Westlands for Sh270 and UN Avenue at Sh150.
Small and medium-sized enterprises have, however, been forced to convert residential apartments to office spaces as they are priced out of the market. Growth of office rent and value appreciation of real-estate developments has attracted both local and international investors.
Delta Corps, a firm associated with Indian tycoon Mukesh Ambani, has been a major player in Kenya’s real-estate market with special interest in commercial space.
In 2011 the firm sold Delta Centre, located in Upper Hill, to the World Bank Group for Sh2 billion. It also constructed and sold Delta Corner to PwC and the University of Nairobi’s Staff Pension Scheme for Sh4 billion.
