SA’s Stanlib plans Sh5.2bn shopping malls for Nairobi
What you need to know:
Stanlib to invest as much as Sh5.2 billion in developing shopping malls in Kenya.
Each shopping mall has a price tag of between $20 million (Sh1.7 billion) and $30 million (Sh2.6 billion), with the most probable location being in Nairobi.
The firm is scouting for development partners as it targets a growing middle class.
Stanlib, the asset management arm of South Africa’s Liberty Group, is set to invest as much as Sh5.2 billion in developing shopping malls in Kenya within the next two years.
The shopping malls are to be financed through the $150 million (Sh13 billion) Stanlib African Direct Property Development Fund launched in May.
Stanlib has hired two employees for its Nairobi office, which will also handle Ugandan operations.
The firm, which is associated with South Africa’s financial conglomerate Standard Bank, has begun scouting for development partners.
Roberto Ferreira, the fund’s manager, told the Business Daily in an interview the firm would develop “Probably a maximum of two (shopping malls) in Kenya.”
Each shopping mall has a price tag of between $20 million (Sh1.7 billion) and $30 million (Sh2.6 billion), with the most probable location being in Nairobi.
“It is still early and we have signed non-disclosure agreements so we cannot discuss where exactly they will be but we can say Nairobi and the greater Nairobi region,” said Mr Ferreira.
Property consultants Knight Frank (Kenya) chief executive Ben Woodhams said Stanlib will probably have a difficult time choosing which part of Nairobi to set up the malls given the city’s wide demographic diversity.
“A place like Westlands is a deep catchment area because of higher incomes and dense population,” said Mr Woodhams, adding that Nairobi has room for more shopping malls but is fast getting saturated.
The fund is primarily meant for development of shopping malls in Kenya, Ghana, Uganda and Nigeria. It targets to construct between six and seven malls, as well as offices and hotels.
“Generally it will be the traditional style mall anchored by food outlets and appliance retailers,” said Mr Ferreira.
The shopping malls will be between 12,000 square metres and 30,000 square metres. Their construction is expected to begin in late 2015 as the fund has to deal with the lengthy process of land acquisition and planning.
Kenya is one of Africa’s most attractive markets for putting up shopping malls due to a young and growing middle class. South African firms, in particular, have been bullish on investing in this sector and developers are jointly focusing on the local market.
A report by global property consultancy firm Jones Lang LaSalle titled Redefining Retail Investment Global Real Estate Futures said that Kenya was among seven key markets for South African developers.
“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.
“Kenya and Zambia appear to be ahead of the retail development curve compared to other countries and have a number of modern shopping centres,” said the firm’s annual report for 2013.
Mr Woodhams added that higher rent yields and the push to diversify portfolios is also attracting property developers to Kenya.
Data from Broll indicates that in 2012 retail space was let out at a monthly rent of between $35 (Sh3,060) and $22 (Sh1,923) per square metre, higher than prime office space at between $15 (Sh1,311) and $9(Sh787) while industrial space fetched the least at between $4.50 (Sh393) and $3(Sh262) per square metre.
Stanlib’s is the second property fund to target the retail sector this year. Private equity firm Actis is developing Garden City through its Africa Real Estate Fund II that raised $278 million (Sh23 billion) in October 2012.
Garden City Mall in Thika is on completion expected to be the largest shopping mall in the region at 50,000 square metres.
Garden City is being constructed in two phases, the first will be 35,800 square metres while the second will be 12,000 square metres.
