Insecurity slows malls business as shoppers keep off
Entry of French retail giant Carrefour supermarket in Kenya will boost real estate sector. PHOTO | FILE | AFP
What you need to know:
Knight Frank says international retail chains and brands booked space in major malls despite the last quarter’s drop in activity.
Large property developers and major retailers recorded a slowdown in activity in the second quarter of the year over insecurity, Knight Frank has said, but notes the investors are now planning expansions.
In its latest report, the international property management firm says shopping malls saw a seven per cent reduction in human traffic as some tenants shied away from booking spaces at blocks under construction and low sales for supermarkets tenants. Knight Frank says international retail chains and brands booked space in major malls despite the last quarter’s drop in activity. “Despite these issues, some retailers continue to show confidence in the sector and in particular strong interest in the region from international retailers and brands,” says the report.
Carrefour, the second largest retail chain globally, has said it will be the anchor tenant at The Hub, a mixed development coming up in Karen, Nairobi. Carrefour has also said it will be the anchor tenant at the Two Rivers development in Runda, Nairobi.
Property developers said there is still strong demand for space in upcoming malls from large firms and individual traders. “We have seen a lot of interest from firms, but also individuals are increasingly making enquiries on available space,” said City Holdings marketing director Geoffrey Chege.
City Holdings is putting up Juja City Mall, a mixed development on a 10-acre plot in Juja, Kiambu. The firm is also the owner of Mountain Mall off Thika Road which he said has a 90 per cent occupancy rate.
Knight Frank report says the shopping malls and supermarkets bore the brunt of the insecurity between April and June.
“Retailers such as supermarkets and restaurants have registered a decline in the footfall by an average of 7 per cent down from the previous quarter with the foot traffic falling drastically in the month immediately after the travel advisories were issued by some western countries based on the recent increase in the level of insecurity,” said the report.
In May, the US and UK governments issued travel advisories to Kenya that Knight Frank said led to a decrease in human traffic to malls.
Nakumatt regional director Thiagarajan Ramamurthy said the retailer’s coastal operations were affected by the Lamu attacks, but business has picked in the last months. “Things are now back to normal. We did well in August and September is also doing well,” Mr Ramamurthy told the Business Daily.
