Fusion Group, a fund management and private equity company, is set to build a Sh1.25 billion office complex in Nairobi’s Upper Hill area.
It is the firm’s second such project in the area in the past seven months.
The latest announcement comes after November last year’s Fusion-led consortium, which invested $16.5 million (Sh1.4 billion) in an office block dubbed Upper Scale Developments on Ngong Avenue, Upper Hill, which is projected to be completed in 2014.
“Fusion announces the syndication launch, for a new $14.7 million commercial office development in the Upper Hill area of Nairobi, Kenya,” said the firm in a statement.
The firm says that the project’s location in Upper Hill’s diplomatic belt is its main selling point.
“The proposed development, in a highly sought-after location near the British and Japanese Embassies, is attracting considerable interest from investors,” said Fusion.
The influx of multinational corporations in the oil, minerals sectors and others setting up shop in Nairobi or locating regional headquarters has created demand for high quality office space that would match the standards that international employees are used to in home countries.
Global property consultants Knight Frank said in a recent report that Nairobi ranked top in a list of 16 cities across Africa, the Middle East and Asia, that measured the rate of increase in office space rent.
Office space rent in Nairobi’s high-end areas increased by 17.9 per cent last year against the 5.1 per cent global average, said the Knight Frank report.
Property management firm Tysons said that rent and service charges in high-end areas increased by 18 per cent and 25 per cent over the same period.
Office space especially on the high-end market is attracting both local and international investors, who are putting up buildings targeting multinationals.
South Africa’s Sanlam and India’s Reliance Industries are some of the international firms that are investing in high-end office blocks.
Sanlam has said that the lion’s share of the $65 million (Sh5.5 billion) it has earmarked for Nairobi will be for office space.
“The bulk of this possible investment relates predominantly to office space in Nairobi. Currently we have not concluded a deal in this regard,” Sanlam Properties chief executive Thomas Reilly told the Business Daily.
Reliance Industries has bought a combined 27.5 acres in various high-end estates in Nairobi and has so far developed two properties — Delta Centre in Upper Hill which was sold to the World Bank and Delta Towers in Westlands which was sold to PricewaterhouseCoopers and the University of Nairobi.