Demand for mall space has shifted to counties with Mombasa, Kisumu and Nakuru counties taking the lead as the next frontiers in their supply after Nairobi, a report by investment company Cytonn says.
The firm estimates that regional malls are more likely to be filled than in Nairobi as they offer a higher rate of return on investments.
According to Cytonn Investments’ latest report, regional malls are recording yields of up to 11.7 per cent and occupancy of 94.0 per cent.
The report said that although high financing costs negatively affect retail space development, improved infrastructure is opening up satellite towns for development. Location, security and competition significantly affect the demand for retail space in Kenya.
“Our outlook for the sector is positive and we expect the sector to continue attracting investments in both development and retailing sectors in the short to medium term. Positive outlook for the retail sector amid high uptake of 82.9 per cent with increasing supply and positive market sentiment,” Johnson Denge, the site and acquisition manager at Cytonn Investments, said.
The report shows that the best markets for investing in retail sector are Kilimani and Karen in Nairobi and Mombasa City.
Opportunity for development in the sector exists with a bias for major towns and cities such as Nairobi and its metropolis, Kisumu, Mombasa, Eldoret and the Mt Kenya region.
Nairobi currently has mall space supply of approximately 3,945,000 square feet, making it the largest retail centre in Sub-Saharan Africa after South Africa.
Mt Kenya that covers Meru, Embu, Nanyuki and Nyeri has the largest development pipeline with construction of the Meru Greenwood Park, Madiba Mall and Cedar Mall in Nanyuki among others.