Pan Africa to start building Sh2bn head office in September

South African majority-owned Pan Africa Insurance is set to kick off construction of the group’s Sh2 billion head office in September, the management said on Friday. The listed insurer said its new headquarters will be located in Westlands, Nairobi, and will be financed through accumulated cash.

The underwriter joins a host of firms opting to build own headquarters outside the central business district. “The approved drawings are for a modern office of about 19 floors (limited by current area plot ratios). We will occupy about three floors and rent out balance to other blue chips.  Excavation should start in a month or so,” Pan Africa chief executive Tom Gitogo told the Business Daily.

Rent from the new office along Waiyaki Way would supplement other incomes, said the managing director of the company 55 per cent owned by Johannesburg-based Sanlam through Hubris.

“We will also continue to pursue our strategy of diversifying our distribution channels specifically both bancassurance and mobile telephony. The development of our new head office on Waiyaki Way in Westlands will commence in the first half of the year,” Pan Africa’s 2013 annual report earlier said.

Pan Africa reported a drop in profitability for the first half of the year and has said going forward it will also focus on improving efficiency in addition to new business lines.

Net profits dropped by 51 per cent to stand at Sh390.7 million from Sh800.18 million posted in the first half of 2013. The company attributed the drop to unrealised gains on equity investments in this half of the year.

READ: Scangroup profits up 151pc, Pan Africa Insurance down 42pc

Firms have been leaving the central district in droves due to heavy congestion that makes conducting business an uphill task. A report on Nairobi’s commercial property market by Mentor Management, a real estate management and development company, says rents in Westlands are amongst the highest in Nairobi due to high demand.

Mentor’s report said Grade A offices in Westlands can attract as much as $2 (Sh174) per square foot in rent, making it amongst the priciest node in the city.

“Gigiri has the highest asking rents in the market at $1.64/square foot/metre although there are only two new buildings in this node. Rents of up to $2.0/square foot/metre are now being recorded for the best office suites in Westlands,” said the report.

Britam and UAP are the other insurance companies that are constructing new group offices. Britam is putting up a 30-storey office block while UAP’s will be a 31-storey building. StanChart, Barclays and Equity banks are some of the financial firms that have moved to new headquarters outside the city.