Kempinski blocks building of rival China firm’s hotel

Five-star hotel Villa Rosa Kempinski has stopped Chinese real estate firm Avic International from constructing a Sh9.6 billion complex in its neighbourhood along Chiromo Road in Nairobi’s Westlands.

The complex, which includes a 35-floor five-star hotel, had received the green light from a number of regulatory agencies, including the National Environment Management Authority (Nema) before Kempinski filed a petition with the environment tribunal, seeking orders against its construction.

Kempinski, which is one of Nairobi’s premier hotels, last week got an order from the Nema tribunal stopping construction of the complex until an appeal it has filed against Avic is heard and determined.

Kempinski reckons that Nema granted Avic an Environmental Impact Assessment (EIA) licence before concerns it raised about the multibillion-shilling complex were addressed.

It says Avic has not explained how it plans to deal with noise pollution, storm water drainage and air quality issues during construction.

The complex, which includes a 43-floor office block and four apartment blocks, will double up as Avic’s Africa headquarters. Two of the apartment blocks will have 24 storeys, while the other two will have 25 and 28 floors respectively.

Kempinski has opposed the project through its parent company Simba Corporation, which is owned by the family of billionaire businessman Adil Popat.

The tribunal last Thursday directed Avic to stop work on the project until the appeal is determined, a decision that is likely to delay work on the project for months.

“The Nema tribunal has received an appeal from Simba Corporation Limited against Nema’s decision to issue you with an Environmental Impact Assessment licence. The purpose of this letter therefore is to direct that all activities relating to the appeal must be stopped until it is heard and determined by the tribunal,” Nema says in a letter to Avic.

Avic is expected to file its defence by October 7, failure to which will see Kempinski allowed to proceed with the matter, the tribunal said.

The complex has been pitched as Avic’s signature property that will also mark the Chinese firm’s entry into the Kenyan hotel industry.

But it now looks like a potentially vicious battle for control of the top end of the hospitality industry has been stirred, pitting Kempinski against Avic whose hotels will stand barely 100 metres apart.

READ: Chinese firm to build 43-storey block in Nairobi

Kempinski says in its appeal before the environment tribunal that its plea to various authorities has failed, and wants Avic’s licence revoked.

Documents filed before that tribunal show the hotel has written to Nema, the Ministry of Environment and Natural Resources, National Land Commission, Kenya Power, Nairobi Governor Evans Kidero and various roads authorities raising questions on the proposed construction in vain.

The letters are attached as part of evidence in Kempinski’s petition which seeks to prove that the agencies have turned a blind eye to concerns it has raised over the project.

It also wants the Nema tribunal to organise a site visit and assess whether the issues raised in the petition are legitimate.

Avic obtained the Nema approvals for the project that will cover 250,000 square metres in July after it paid Sh97.2 million in permit fees. The complex will border ARM Cement headquarters, Kempinski and Mirage Towers.

Avic bought five parcels of prime land totalling 7.5 acres for the project.

Kempinski contends that Nema granted the EIA licence to Avic on the assumption that all five parcels of land will be amalgamated into one, but Kempinski says Avic’s land is separated by a public road – Chiromo Lane – making it impossible to amalgamate the entire property under one title deed.

“The process of developing the parcels of land for the intended purpose has begun even before the concerns raised are addressed.

“It is not legally possible for Chiromo Lane to be regarded as part of Avic’s property for purposes of amalgamation. Any approval given on the basis of an intended amalgamation can therefore not be allowed to stand,” Kempinski says in its petition.

Under the law, parcels of land separated by public utilities such as roads cannot be merged under one title.

Kempinski says Avic should have applied for separate approvals from Nema for the land on which it intends to build the complex on.

At home in China, Avic International, which is valued at about $42 billion (Sh4.4 trillion), is mostly involved in aerospace and military manufacturing and is viewed as China’s challenger to Airbus and Boeing.

The firm has a real estate arm with hotels in China and Sri Lanka. Avic’s facility has been billed as a direct competitor of Kempinski that has exclusively enjoyed the prime location since August 2013.

Avic plans to build its high-end hotel on the northern part of the land, which also opens up to Chiromo Road. Its facility, however, will be over three times bigger than the 10-floor Kempinski.

Kempinski adds that Avic has not given details how it will deal with increased traffic in the location after the complex is constructed.

The hotel says construction of Avic’s facility has hived off a part of Chiromo Lane and is bound to increase traffic in the area, a move that will make it harder to access Kempinski especially during rush hours.

“The increased traffic to Chiromo Lane and Chiromo Road will result into massive traffic congestion around the development area and the entire Westlands. There is no provision for pedestrian traffic especially on Chiromo Lane,” the petition added.

Kempinski and Avic had held talks regarding the complex before the approvals but no resolution was reached. Kempinski says Avic abandoned the talks after one meeting and it only later learnt that Nema had granted approvals to the Chinese firm.

Kempinski’s lawyers aver that Avic’s project does not adhere to Nairobi’s zonal specifications for projects of that size within the city limits.

The dispute comes as Mr Popat’s family increases its interests in the hospitality industry. The family currently owns the 200-room Kempinski and the 12-tent Olare Mara luxury camp. Both are managed by Europe’s oldest luxury hotel group – Kempinski.

The Popat family has lined up investments in four mid-range hotels in Nairobi, Kisumu and Naivasha, targeting entrepreneurs and local holidaymakers in search of affordable accommodation. The family’s investment is expected to be in the region of Sh3.1 billion.

Simba Corporation will, however, manage the upcoming facilities on its own. The firm is currently setting up two four-star hotels under the “Acacia Premier” brand for budget tourists, with rates set at Sh11,000 per night.

A similar number of two-star hotels dubbed “Acacia Express” and priced at about Sh5,500 per night will aim to capture the lower-middle market. Acacia Premier Kisumu opened its doors earlier this year.