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Nairobi now a regional shopping destination, global city to watch

By Ferdinand Mwongela | October 22nd 2015
Garden City Mall along Thika Road in Nairobi. The report says Kenya’s middle class is now living, working and shopping like their developed-world counterparts. (PHOTO: FILE / STANDARD)

With 1.8 million square feet of shopping malls coming into the market, Nairobi is fast becoming an East African shopping destination. This is according to a global report by Knight Frank.

Global Cities: The 2016 Report, which was launched globally last week, also puts Nairobi on the list of five cities to watch. The others are Dubai in the United Arab Emirates, Kuala Lumpur in Malaysia, Bangkok (Thailand) and Moscow (Russia).

“Given that the mall stock previously had totalled 980,000 square feet, this amounts to a revolution in the city’s retail experience, which matches the huge economic and demographic changes that have unfolded in Kenya,” said the report, calling Kenya “a developing world success story.”

Global corporations

Knight Frank says Nairobi is also taking off as a hub location for global corporations looking to establish an office to cover East Africa, partly due to a growing realisation by many multinationals that sub-Saharan Africa is too big to be serviced just out of an office in South Africa.

The report points out that for 2016, the IMF is forecasting Kenya’s GDP to expand by nearly 7.2 per cent, compared to 2.1 per cent for South Africa and nearly 5.0 per cent for Nigeria.

While Nairobi’s was listed as a city to watch thanks to its growing retail experience, Dubai got on the list due to its upcoming aerotropolis and Bangkok due to the growth of its CBD in three different directions.

Kuala Lumpur is credited with its expanding rail network and Moscow, its falling rents, which have made available large amounts of office space at relatively low cost in both Moscow City and the central business district causing a reversal of a decentralisation trend that has characterised the Moscow market in recent years.

Back to Nairobi, the Knight Frank report points to a revolution in the city’s retail experience, matching the huge economic and demographic changes unfolding in Kenya.

 More choice

The middle-class, the report says, are now living, working and shopping increasingly like their developed world counterparts.

In addition to a modern retail experience and international brands, there is growing demand for food and leisure outlets.

“Those embarking on a shopping trip in Nairobi today have a lot more choice compared to a year ago.... Nairobi is expanding from being the economic focus of East Africa into its biggest, modern shopping destination,” said James Roberts, Knight Frank Chief Economist.

“Shopping is increasingly being combined with socialising. This is why Nairobi needs more modern retail stock,” said Roberts.

Nairobi has seen several malls come up with the latest being Garden City, opening this year and Two Rivers Mall, which is under construction.

The United Nations forecasts that Kenya’s urban population will expand to 14.7 million people, an increase of nearly 2.8 million, which will clearly fuel further demand for modern shopping malls — but the retail development pipeline is prepared to meet the challenge. The report also pointed out that Kenya is among countries with global cities that are well-positioned to gain from the growing popularity of short-let accommodation in serviced apartments.

However, the country must formalise this developing class of real estate, instill professionalism and tap into branding this property type in order to reap the full rewards.

“As the sector grows globally, quality assurance for short-term accommodation will be a challenge, particularly given that future economic growth will be dominated by the emerging markets,” said the report.

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