Why Upper Hill is East Africa’s richest square mile

Mercy Njeri has been operating a food joint on Mara Road, Upper Hill in Nairobi, for close to a decade. Every lunch hour, she is all smiles as she watches hordes of hungry workers troop to the kiosk. Business is booming.

Behind the smile, however, is a worried woman. Worried that the same construction boom that brings her brisk business could also spell doom for her. The plot adjacent to her kiosk is already earmarked for the construction of yet another skyscraper.

“This is not the Upper Hill I knew 15 years ago. You go to bed only to find a new building reaching the sky the following morning. I will have to look for an alternative location, if I find any,” she says, dejected.

Radisson Blu Hotel in Upper Hill. (pHOTO: COURTESY)

The gentrification of Upper Hill has taken the city by storm. Where humble abodes of civil servants stood on half-acre plots a few years ago, skyscrapers of all sizes and shapes now stand, egged on by the ever-growing space needs of financial institutions, insurance companies and international corporates, all angling to have a foothold in Kenya‘s most expensive location.

Financial hub

Upper Hill, considered the city‘s financial hub, is slowly turning out to be the equivalent of South Africa’s Sandton City. Like Sandton, Upper Hill can easily be termed as East Africa’s richest square mile.

While some have argued that the growth is happening at a rate faster than the development of related services, those who have a stake in Upper Hill say this expansion is not about to stop anytime soon.

Radisson Blu Hotel in Upper Hill. (PHOTO: COURTESY)

One of the optimists is Andrew Salmon, a marketing manager at Lordship Africa, a real estate company based in the area. He says there must be some good in a location where every business wants to be situated.

“We are only scratching the surface as far as the redevelopment of Upper Hill is concerned. There are many proposed office buildings that are still in the pipeline. Upper Hill is also contributing to the boom in the hospitality industry, having added over 400 hotel rooms to existing stock in the last five years. And don’t forget we have two of the largest embassies here-Britain and Japan,” he says.

Dr Ojiambo Oundo, the principal consultant at Roack Consult, a real estate firm, says Upper Hill’s glad tidings have elevated the status of the country to a level that it can now compete on equal terms with some of the best economies in the world.

According to Dr Oundo, even the high land prices have not held back the area’s upward trajectory, adding that such appreciation would not be possible if investors were not confident of getting good returns.

Dr Oundo, whose office is located in Upper Hill, says the robust growth is a clear indication of an expanding economy since all the financial transactions have added to the country‘s revenue basket.

International clientS

“We should all be proud of having Grade A offices in Kenya that are the envy of our neighbouring countries and that can host any international client,” says Dr Oundo.

Lately, though, there have been reports that there is an oversupply of office space in Nairobi, with Upper Hill and Westlands said to carry the largest stock of such space.

A report released towards the end of 2014 by Mentor Management Limited warned of a glut in this segment of the market during the next two years.

“We predict that by the end of 2016, there will be over 2.8 million square feet of office space — 19 per cent of the total stock of new buildings delivered since 2009 — lying vacant. This excess supply of office space is expected to originate from Upper Hill and Westlands during 2015,” said the report.

Still, such reports have not dampened the spirit of Isaac Maira, the sales and marketing manager with Tysons Limited. Maira says the talk of an oversupply of office space in Upper Hill is hot air. The so-called bubble, he adds, is not about to burst any time soon.

“There is no oversupply of office space in Kenya, at least not in Upper Hill. It all depends on a developer’s concept and targeted clientele that may not be obvious to everyone,” says Maira.

For example, Maira says, a particular developer may be targeting the rental market where there is still demand for office space. On the other hand, a developer may target a single buyer for an entire office block. Both will stay in the market for diverse periods of time.

Economic sense

“Fourth Ngong Towers, for instance, is 180,000 square feet of office space that targets young professionals, including lawyers and doctors looking for rental space. On the other hand, a structure like Flamingo Towers on Mara Road is targeted at a single buyer who will fork out over Sh2 billion. Such a building may stay longer on the market than the rental one,“ he says.

In any case, Maira says, any building erected in Upper Hill must make economic sense owing to the high cost of land.

“Imagine buying an acre or less for close to half-a-billion shillings. A developer must get a good return on his investment even if it means keeping his development a little longer on the market. That does not constitute an oversupply in office space,” says Maira.

But even as Upper Hill continues to grow at an unprecedented pace, it has to contend with a few challenges that cause jitters among investors. Key among these is the slow pace of infrastructure development

For a long time, most of the roads that connect Upper Hill with the city centre via Ngong Road or Uhuru Highway have either been in a poor state of repair or too narrow to accommodate the high traffic.

However, the county government in conjunction with the Kenya Urban Roads Authority (Kura) has embarked on a drive to rehabilitate most of the roads in the area. A number of the roads have been turned into dual carriageways to accommodate increased traffic.

Business owners

According to Upper Hill District Association, an umbrella body formed in 2001 to articulate the needs of the area‘s business owners, the road works are almost 90 per cent complete.

“All the tall buildings coming up will obviously increase both vehicular and human traffic to Upper Hill. Kura is in the process of creating the missing links such as a direct access to Mbagathi Way to ease traffic,” says Wendi Kawira, the association‘s administration manager.

But the construction of roads has brought with it yet another problem: lack of regular water supply. Apparently, some road contractors damaged the main water pipes, thus interrupting water supply and forcing businesses to buy water from vendors.

“Nairobi Water and Sewerage had promised to supply water at least twice a week to fill our tanks before full resumption of services but this has not happened. Many people have sunk boreholes to get over the problem while the rest have to keep buying water,” says Kawira.

As developments in Upper Hill continues, Kawira is hopeful that there will be more cooperation between the public and private sector in the provision of services if only to attract more investors to our own ‘richest square mile’.