The improved performance was driven by higher valuation of the shopping complex, resulting in unrealised fair value gains.
Naivasha’s Buffalo Mall made a net profit of Sh33 million in the year ended June, reversing a net loss of nearly Sh600 million a year earlier.
The improved performance was driven by higher valuation of the shopping complex, resulting in unrealised fair value gains.
The property’s financial performance has been disclosed by Mauritius-based Grit Real Estate Income Group which has a 50 percent stake in the mall. The multinational has announced plans to sell its stake in the Naivasha property. It has already received a non-binding buyout offer from undisclosed prospective investors.
The shopping complex booked fair value gains of Sh25.7 million in the review period compared to fair value loss of Sh434.6 million a year earlier.
This reversal helped the mall post a profit despite sales declining sharply. Revenue from the property fell 48.1 percent to Sh55.4 million from Sh106.9 million.
The revaluation gain was the result of an assessment of Buffalo Mall’s market value by consultancy firm Knight Frank in June and which placed the property’s worth at Sh750.1 million.
The mall is one of the few new shopping complexes to book profits in a tough commercial real estate market characterised by significant vacancies and reduction of rental fees.
Two Rivers Mall, the country’s biggest retail property, made a net loss of Sh3.4 billion in the year ended March, reversing a net profit of Sh915.8 million the year before. Nearly 80 percent of the space at the shopping complex has been taken up by tenants.
Increased investment in malls across major towns has led to intense competition for tenants who are benefitting from lower rents and other favourable lease terms at the expense of developers.
The rent reduction trend is spread across the country and is expected to continue as more properties are completed.
Malls in Nairobi, where quality properties are currently charging monthly average rents of between $32.5 (Sh3,380) and $48 (Sh5,000) per square metre, are facing the highest pressure to reduce their lease fees as more properties are opened.
While Grit plans to exit the Buffalo Mall investment, it is expanding its real estate portfolio in the rest of Africa with recent acquisitions of buildings in Ghana and Mozambique.
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