Garden City is on Thika super highway. The upgraded road is expected to boost the demand for space at the mall. FILE
What you need to know:
World Bank unit starts talks for loan and stake in Garden City on superhighway.
Actis has said Garden City will cost $150 million (Sh12.6 billion) over five years.
The International Finance Corporation (IFC) is negotiating to inject Sh4.1 billion ($49.8 million) in Garden City Mall, a shopping complex conceptualised by private equity firm Actis.
The investment will be in form of a loan and equity stake in Actis, according to an IFC disclosure note seen by the Business Daily. Actis says that Garden City Mall, a development along the Thika Super Highway, will be the region’s biggest shopping complex.
Actis has said Garden City will cost $150 million (Sh12.6 billion) over five years.
“Construction is expected to commence in June 2013 and IFC is considering a loan of up to $40 million and providing up to $9.8 million in equity to the project,” says the IFC note.
Ground breaking for the multi-billion shilling project was planned for December 2012, and completion projected for May 2014. Actis is developing Garden City Mall on a 32-acre site that previously belonged to East African Breweries Limited.
The private equity firm’s plan is for a shopping complex consisting of 50,000 square metres of retail mall, commercial premises, 500 homes, and a four-acre central park.
The disclosure note says that a two-storey shopping centre with 35,800 square metres of space is to be first constructed, with an option of expanding the space by 12,000 square metres.
The disclosure note adds that 421 units are to be constructed and 3.4 acres of serviced land sold to sub-developers at a later date.
At 35,800 square metres of lettable space, the first phase of Garden City will still be the region’s biggest when compared with other shopping malls. The Village Market has 19,500 square metres of retail space that would make Garden City nearly twice as big.
Actis is developing Garden City through its Africa Real Estate Fund II that raised $278 million (Sh23 billion) in October.
“Actis’s 10-person real estate team has already established a visible portfolio for the fund with developments in Kenya, Ghana, Nigeria and Zambia. These include Ghana’s first green office building One Airport Square in Accra and East Africa’s largest retail centre, Garden City in Nairobi,” said Actis at the time.
In a previous interview, Actis head of East Africa Michael Turner said that between $30 million (Sh2.5 billion) to $40 million (Sh3.4 billion) from the Actis Africa Real Estate Fund II would be used for Garden City, indicating room for additional funding.
The IFC is already an investor in the Actis Africa Real Estate Fund II which assures it an indirect investment in the Thika Road complex. This new proposal would, however, give it a direct entry through the loan and equity investment.
Middle class
Retailers have started booking space ahead of ground breaking. Property managers Knight Frank say they had let out 70 per cent of the retail space by February. Nakumatt and South African retailer Massmart have confirmed that they will be tenants in Garden City.
One of the selling points of the complex is the Thika superhighway, which has opened up areas Nairobi North and made it faster to access the town centre.
Aspire Development Management Limited UK (Aspire) and Mentor Management will manage the development of the project.
Kenya’s growing middle class has brightened prospects for investors in consumer goods, which is likely to boost retailers’ demand for space at the mall. UK property consultancy Jones Lang LaSalle in a report titled Redefining Retail Investment Global Real Estate Futures said that South African retailers and developers are jointly focusing on markets such as Kenya.
“The focus will be on Nigeria, the region’s largest consumer market, oil-rich Angola, Ghana and Mozambique, and some of the more stable markets in Southern and Eastern Africa such as Zambia, Kenya, Tanzania and Uganda,” said the report.
