Malls put finger on pulse of property trends
Posted Thursday, July 12 2012 at 16:12
Shopping centres are becoming pointers to where real estate investors are putting their money as they change the face of the city’s neighbourhoods.
Nothing quite reveals Kenya’s evolving lifestyle trends than the number of shopping malls coming up across the capital.
The investments are a key pointer to where real estate investors will put their money. This week’s news that Massmart, a supermarket chain majority-owned by US retail giant Walmart, would set up shop in Nairobi may as well be the biggest pointer yet of the global sentiment about the Kenyan consumer.
UK-based private equity fund Actis is developing a 450,000-square feet shopping mall, the largest single retail space development in Kenya, where Massmart is expected to be the anchor tenant. The mall will cost Sh12.6 billion. Massmart is expected to come into the market through its subsidiary, Game.
While that may not be exactly what hundreds of proprietors operating corner shops within residential are looking forward to, the rush by retail giants to set up outlets at their target clients backyards is certainly changing the landscape of property development.
The Actis-owned ‘Garden City’ is expected to break ground this month and the mall will come with 500 new homes as well as a four-acre park to be used by residents for leisure as well as commercially as events grounds.
“The retail mall will include a flagship store for Game, their first in Kenya,” said Actis in a statement announcing the Sh12.6 billion real estate plan.
“Detailed discussions are progressing with other retailers looking to enter the rapidly expanding Kenyan market such as South Africa fashion group, Foschini.”
The property is expected to be ready by May 2014.
Game is the third largest distributor of consumer goods in Africa and the largest retailer of general merchandise, liquor, wholesale of basic foods and home improvement equipment.
Kenya has the second most developed retail market in sub-Saharan Africa after South Africa with about 30 per cent of retail shopping being done in formal outlets, a Citigroup study has shown, whetting the appetite of global chains.
The study identified East Africa as the next growth frontier for huge SA retailers as well as some of the world’s biggest investors keen to cash in on a growing middle-class and rising consumer demand.
But Citigroup reckons that dominance of the sector by local firms has acted as a barrier to the entry of retailers like Shoprite and Massmart to the Kenyan market.
“East Africa is where SA retailers lack scale due to strong local retailers. Acquisition looks to be the easiest route to build scale in this region,” said the report.
It’s the demand for this retail space that has seen developers invest in shopping malls across the city. Garden City is only the latest addition to tens more shopping complexes that are in the pipeline – in different stages of construction.
Nairobi’s Eastlands area, which has long been associated with low socio-economic status and insecurity, is currently reaping big on dividends from the broadening middle income class and growing consumerism.