Why most industrial developers are moving to satellite towns

Harvest Standard warehouses in Athi River. [Courtesy] Property developers say it is easier for manufacturers to do business in satellite towns than in Nairobi's metropolitan area owing to favourable cost and availability of land in the metropolitan areas. They note that Athi River has seen increased demand for commercial spaces as manufacturers relocate to satellite towns. Additionally, developers note that for a proper industrial property to be set up, it requires up to 100 acres of land or more, which Nairobi's industrial area can't offer at the moment, hence, the relocation of developers to satellite towns. Purple Dot International Ltd, a property developer said satellite towns are ideal investments for large manufacturers due to their proximity to the city - making them easy to bring in raw materials. They include Kiambu's Ruiru, Kitengela and Limuru among others. "Ease of doing business. If you look at the larger Nairobi metropolitan area, Athi River has the ease of doing business and from the manufacturers' perspective, is better than the other areas," noted Sales Manager at Purple Dot Kelvin Mutuma. He stated that when compared to other industrial zones, Athi River has good land rates. Just like any other real estate development, location is key for industrial developments. Clive Ndege, head of sales at Superior Homes noted that Athi River is ideal for industrial developments owing to its proximity to Nairobi's central business district. According to Mr Ndege, the prices of land in Athi River are slightly affordable and "proper industrial parks need a lot of land, 100 acres and upwards. Getting 100 acres in any other place other than satellite town, is almost impossible, and if found, costs more". The developers have noted that for the workers who end up working in the industrial zones, Athi River offers more affordable homes as opposed to the Industrial Area. As compared to when they started setting up master-planned facilities in the satellite town, the developer says the land has appreciated in value. Additionally, master-planned facilities make it easier to do business in Athi River. "The hectic nature of Nairobi makes it easy for people to realise they can now set up an office and a manufacturing base at one zone." They added that people are now moving offices to warehouses. According to Mutuma, congestion in Nairobi's Industrial Area inhibits spaces for expansion for industries. "There is very limited space for expansion in the Nairobi industrial area," Mutuma said, adding that Harvest Industrial Park's master-planned industrial zone that sits on 120 acres of land in Athi River is ideal for investors. The developer terms master-planned industries as incentives for presidential properties to come up. "Demand for industrial investors is high in Athi River and other satellite towns because it offers a very unique location for manufacturers and logistics," Mutuma said adding that the conversation to set up the Nairobi-Mombasa expressway and opening up Konza, makes the area a central point to serve other cities. According to Clive Ndege, head of sales at Superior Homes, the congestion in Nairobi's Industrial Area is pushing developers to satellite towns. "People initially went to the Industrial Area due to its proximity to Nairobi, however, there is no longer space for new developments". Additionally, it has been noted that for new industries to come into the industrial area, it would mean closing down the existing ones. Even as the demand for industrial spaces - especially for manufacturers goes up, Kenya's manufacturing sector has been stagnating at 7.6 per cent of GDP. Superior Homes attributes increased demand for industrial properties to the growing manufacturing sector, contrary to official data showing that the sector's growth has stagnated. "Most of the industries produce not only for Kenya but also for cross-border distribution. This means that areas like Athi River are now getting a lot of demand for manufacturing spaces," Ndege said adding that the railway system also makes Athi River ideal for manufacturers. According to Hass Property Index 2024 report, land prices in Nairobi's satellite towns grew at the slowest pace since June 2023 as a tough economic environment stifled demand. The report shows that satellite towns have in the previous quarters seen impressive growth, driven by both private and commercial property developers though a tough economy which came with job losses, and high interest rates has impacted would-be land buyers. Big Cement companies such as Savannah Cement, Portland Cement, Mombasa Cement, Simba Cement and Bamburi Cement have set up shops in Athi River. "Periods of economic uncertainty and slowing GDP growth can lead to some developers putting off decisions to acquire land, thus reducing demand which drives prices higher," said Ms Sakina Hassanali, Head of Development Consulting and Research at HassConsult. Nine out of the 14 towns tracked recorded a deceleration in price expansion, led by Thika and Mlolongo where growth fell while the price of land in Athi River accelerated taking up 6.7 per cent of the market, followed by Juja at 6.2 per cent, Kiambu 4.5 per cent, and Kiserian 4.3 per cent of the satellite towns under review. Industrial zones typically have high emissions and property developers have introduced green projects making it easier for people living around the properties. "Green also saves on water, energy and bills for industries," Purple Dot said. As industrial property developers move to satellite towns, the projected impact is pushing commercial growth in the towns and land prices appreciating in value. "I think Athi River is one of the towns to look out for. The location is very prime, and talks of improving transportation around it will make it fully functional," Purple Dot property developer said. According to Ndege, the projected outcome of the relocation to satellite towns is increased demand for rental units and commercial shopping spaces.

Why most industrial developers are moving to satellite towns

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