Sanlam Kenya intends to sell more properties, further reducing its exposure to the real estate market.
The insurer and a sister company, MCIS of Malaysia, have put on the market properties valued at a combined 31 million South African Rand (Sh224 million).
The disclosures have been made by their Cape Town-based parent company Sanlam Group.
“The Sanlam Emerging Markets properties relate to MCIS and Kenya properties still in the process of finding potential buyers,” the multinational says in its latest annual report.
Sanlam has been selling properties over the years after building its current head office in Westlands, Nairobi. The 18-storey building was constructed at a cost of Sh2.7 billion.
The insurer raised Sh833.5 million from property sales in the year ended December 2020.
The outbreak of the Covid-19 pandemic caused a slowdown in the real estate market, resulting in lower asking prices. Those unwilling to offer discounts have taken longer to sell the assets.
The glut in the market has also contributed to the depressed selling prices as potential buyers factor in the impact of reduced rental charges.
Listed property investor Ilam Fahari I-Reit #ticker:FAHR says office rent in top-grade buildings has dropped by an average of 16.9 percent over the past four years on increased supply.
This has left mall and office landlords with subdued earnings, signalling the end of a property boom that previously offered investors double-digit returns.
Average asking rates for Grade A office space fell to $1.20 (Sh150) per square foot at the end of last year from $1.40 (Sh162) four years earlier, property market data from realtor Knight Frank Kenya shows.
The completion of the 42-floor Global Trade Centre (GTC)—a mixed-use development that comprises office, retail, hotel and residential property— has injected about 625,000 square feet of new office space in Nairobi.
Other buildings that have recently introduced bulk office space in Nairobi are the National Social Security Fund (NSSF)-owned Hazina Trade Centre in the central business district at 234,000 square feet, the Convex (250,000 square feet) and Riverside Square (94,000 square feet) in Riverside area.