Supermarkets lift commercial spaces outlook
By Graham Kajilwa | July 15th 2021
The takeover of spaces once occupied by Tuskys chain of supermarkets by their rivals has helped the retail real estate sub-sector to remain afloat.
The Status of the Built Environment report by the Architectural Association of Kenya (AAK), however, notes that this positive trend amidst the Covid-19 pandemic that has subdued the economy is short-lived.
The report is not kind to owners of commercial spaces as the outlook is negative with the residential property also receiving a neutral nod.
While the report links the positive outlook to Kenya’s position 56 in the Ease of Doing Business list by the World Bank, it notes the sector’s positive performance may soften towards the end of this year.
“This is attributed to the existing oversupply of space estimated at two million square feet in the Kenya retail market and 3.1 million square feet in the Nairobi Metropolitan Area and a possible reduced demand for physical retail space owing to the gradual shift towards e-commerce and the tough economic environment brought about by the Covid-19,” the report says.
Due to Tuskys financial woes, rivals such as Naivas, Carrefour and Quickmart have been on the frontline to acquire spaces the retail chain occupied, to exploit the market.
The report notes that while an influx of housing units is expected in the residential market, the forecast for the commercial side is negative.
However, AAK said the enactment of the Sectional Properties Act, 2020 that came into effect last year destabilised the residential property market.
The Act provides that individuals can hold certificates of ownership for units in apartment blocks.
This altered the apartment market, the report says, as it made homeownership accessible to many first-time buyers.
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