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Nairobi tops regional shopping mall hotspots

NEWS
By Dominic Omondi | February 10th 2016
The project is dubbed 'two rivers' as it is built between Rivers Gichi and Ruaka, is expected to cost Sh17 billion making it the biggest in sub-Saharan Africa. It's being built on 100 acre piece of land and it's expected to occupy 62,000 square metres.

KENYA: Nairobi has the highest number of shopping mall development hot-spots in Sub-Saharan Africa, a new report says. Global property consultancy firm Knight Frank in a report titled Shop Africa 2016 notes that Nairobi’s 470,000 square metres of shopping space in the pipeline ranks above other peers in Sub-Saharan Africa’s retail markets.

Five other cities with the largest shopping centre development pipelines outside of South Africa include Angola’s Luanda, Nigeria’s Lagos, Tanzania’s Dar es Salaam and Mozambique’s Maputo.

Nairobi has an existing mall space of 391,000 square metres, which is characterised by malls such as The Junction, Sarit Centre and Garden City. Already, this ranks the city as the largest retail market in the region by existing shopping centre floor space. Key mall space in the pipeline includes investment firm Centum’s Two Rivers Mall in Runda and The Hub in Karen, which opened on February 4. Other malls include Garden City Mall with 50,000 square metres.

The report notes a clear trend towards mixed-use development in the new projects where office, residential and leisure facilities converge.

Retail Portfolio Manager at Knight Frank Kenya, Ashmi Shah said: “The developers of Nairobi’s modern malls are building new city hubs, where people can live, work, shop and play, all on the same site, in locations near key transport links.”

Notably, most of the developers and landlords of shopping malls in Nairobi are Kenyans. In addition, the new malls have generated good interest from prospective tenants and have achieved rents that compare favourably with the city’s more established shopping centres.

The Kenyan retail market remains dominated by local operators, the Shop Africa 2016 report notes, but international chains have assumed growing interest. For instance, French retailer Carrefour will be an anchor tenant at both Two Rivers and The Hub. Turkish fashion brand LC Waikiki will also enter the Kenyan market with a store at Two Rivers.

Major international retail groups have developed an interest in the wider Sub-Saharan region, the Shop Africa report states, adding that most international brands enter the region either through partnerships with local operators or franchise agreements.

Undersupplied

The variety of retailers seeking to expand their footprint in the region has helped the newly developed malls to absorb demand. Such include regional chains like South Africa’s Shoprite, Pick n Pay, Game and Woolworths, which are venturing into other markets, and home-grown retailers such as Nakumatt, Tuskys and Uchumi in Kenya.

Head of Africa at Knight Frank, Peter Welborn said: “The shopping centre sector currently provides many of the most eye-catching examples of commercial property development in Sub-Saharan Africa.” “Even though retail construction activity has accelerated, nearly all of the region’s major cities remain hugely undersupplied by global standards. Shopping centre development is set to continue apace, and it will play a major role in shaping the future landscapes of Sub-Saharan African cities.”

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