Companies

Britam set to build shopping mall on Nairobi’s outskirts

britam-1811

Britam’s chief executive Benson Wairegi addresses the Press at a past event. The firm is diversifying earnings away from the mainstay insurance business. Photo/FILE

Investment firm Britam is set to build a shopping mall along Nairobi’s Mombasa Road, underlining the rising popularity of the mega retail complexes among high-net worth investors.

The firm’s chief executive Benson Wairegi told the Business Daily that the company was buying 10 acres of land near Mlolongo to build a mall, targeting the growing number of middle-class Kenyans building homes in the south east of Nairobi.

“We have signed a sale agreement for the land which will cost us about Sh300 million,” Mr Wairegi said.

“We plan to build a shopping mall to cater for the middle class residing and commuting through that area.”

The proposed development will be Britam’s first shopping mall, joining a growing number of private equity, investment firms and private developers seeking to tap Kenya’s burgeoning middle class with growing disposable incomes.

At least seven new malls are under construction or have opened their doors to the public recently.

This includes the Greenspan Mall, Thika Road Mall and Mountain Mall with the latter two located along the Thika Superhighway already operational.

PE firm Actis will next year open the first phase of the Sh12.6 billion Garden City mall, which at 50,000 square-metres will be the region’s largest mall — bigger than Sarit Centre (30,000 square-metres) Junction (26,000 square-metres) and Westgate (30,000 square metres.
Listed investment firm Centum is also pouring billions of shillings in real estate projects including a shopping mall in Kiambu.

Mr Wairegi did not disclose the worth of the mall’s development, but investors estimate that it costs between $35 million (Sh3 billion) and $60 million (Sh5.1 billion) to build a mall in Africa.

While the vast majority of shoppers in Nairobi still frequent traditional markets, habits are changing due the rising number of affluent consumers.

The concentration of well-heeled shoppers in the malls that have emerged in Nairobi is acting as an attraction for the leading supermarkets.

The boom is attracting well-known brands like South Africa’s Massmart, fashion group Foschini and a Mauritian retailer — all have booked space at the Garden City.

The dearth of malls in Africa has hampered the expansion of Massmart, Shoprite Holdings and other big South African retailers.

Insurance business

Consulting firm McKinsey estimates that by 2020 Africa’s spending power will be $1.4 trillion, up from $860 billion in 2008, and there will be 65 cities with a population of over one million by 2016, roughly doubling since 2005.

The planned mall is one of several property investments being undertaken by Britam in a strategy aimed at diversifying its earnings away from the mainstay insurance business.

The company recently invested over Sh300 million to acquire land in Ngong where it plans to develop commercial and residential units.

The construction sector has been one of Kenya’s fastest growing sectors over the last decade, and its returns have outpaced those of equities and government securities, hence the attraction of high net worth investors.

Britam last week announced its acquisition of a 25 per cent stake in property development firm Acorn, which will spearhead the investment firm’s real estate projects in Kenya and in the region.

The investment firm’s net profit rose 28.7 per cent to Sh2.1 billion in the six months to June, helped by capital gains in its equity portfolio.
Its share price has remained unchanged over the past six months at Sh10.90.

[email protected]