Market News

Uncertain outlook for mall developers as tenants thin out

Two Rivers Mall on Kiambu Road. FILE PHOTO | NMG
Two Rivers Mall on Kiambu Road. FILE PHOTO | NMG 

An oversupply of shopping malls in cities and their environs is likely to spell trouble for developers, Britam Asset Managers has said.

Britam’s latest real estate report capturing trends in the first half of the year, says the the glut in malls countrywide is expected to make it harder to get tenants.

“Slower uptake of space is anticipated within the new malls due to demand and supply mismatch, where tenants are fewer than the supply,” says Britam Asset Managers.

The report says this will in turn impact on retail rents, that are expected to remain relatively stable as more space is added to the market.

The report comes amid fears that the woes facing large retailers, who are the anchor tenants in many malls, are likely to compound problems for owners.

Key tenants have been closing their operations as the retail business hits a rough patch.

Nakumatt and Uchumi supermarkets #ticker:UCHM are among troubled retailers which have announced plans to close poorly performing branches in Kenya and Uganda as a way of cutting cost.

Some of the major mall additions to the retail stock this year are the Rosslyn Riviera (GLA) and Two Rivers Mall (GLA, both on Limuru Road, Nairobi.

Britam projects that malls designed to cater for neighbourhoods will achieve better returns than large mega facilities mainly designed as destination hubs.

This could be linked to the convenience brought about by the easier accessibility and the population density within estates.