Delta Corp East Africa Ltd has inked a deal to sell one of its newly built properties, Delta Centre, to the World Bank and the International Finance Corporation (IFC) at US$22.8 million (Sh2.2 billion). The real estate developer entered into a sale agreement with the World Bank in June, ending months of negotiations running close to a year. The 21-storey office block is located in the rapidly growing Upper Hill commercial district – along Menengai Road, off Hospital Road – about five kilometres from Nairobi’s CBD.
Actual construction of the building has been completed and is now in the finishing stages including partitioning. The building will be ready for occupation by June 2012, according to property agency Lloyd Masika. DCEAL is a subsidiary of Reliance Industries Ltd owned by Indian billionaire Mukesh Ambani, which is in a joint venture with Delta Corp, a major player in India’s gaming and hospitality industry that is also listed on the Bombay Stock Exchange (BSE). Delta Corp has 40 per cent equity in the East Africa venture. “This venture recently finalised the sale of its prime property ‘Delta Centre’ to the World Bank for US$22.8 million,” said Delta Corp in its 2010/11 annual report.
The World Bank Group has been scouting for a suitable office building in Upper Hill to buy in the last two years, according to real estate agents and valuers. Usually, the institution prefers renting to buying space. The sale becomes the largest single property transaction in Nairobi and the whole of East Africa in recent times, making Delta a major player in the regional property market. “This indeed is the biggest single property sale recorded in the market in recent past. Most single sales have clicked in the region of upto Sh1 billion,” Mr Timothy Mutisya of Lloyd Masika who brokered the deal for DCEAL told the Star. “The whole transaction including negotiations to closing the deal took almost a year since September 2010 to June 2011.”
Delta Centre has total lettable area amounting to 142,260sqft and about 350 parking slots, according to Lloyd Masika. “It has 13 typical office floors, six-podium parking space, commercial space on ground floor and one semi-basement parking level,” said Mr Mutisya. The joint venture between Delta Corp and Reliance Industries was forged in 2008 with a view to exploiting emerging real estate opportunities in East Africa.
DCEAL has acquired land in prime locations in Nairobi for commercial and residential development, most of which is at various stages of development in multi-billion shilling investments. Commissions in the Ministry of Justice and Reconciliation occupy one of its properties in Westlands. The firm is building the 20-storey Delta Corner at Westlands roundabout which is being constructed at an estimated cost of Sh1.56 billion, according to details from TMS Consulting Group, its subsidiary.
It also developed the Riverside Office Park, a seven-storey office block on Bishops Road, and the 16-storey Delta Chambers office block in Upper Hill. DCEAL has built residential housing in Nairobi and Athi River and has already completed several projects including 146 units in a Nairobi housing scheme, 130 units in Athi River, and Parkside Villas 60 units. It plans another housing scheme of 146 units, Delta Plains, in Athi River.
The real estate firm is also in the initial stages of putting up a 25-storey Delta Hotel at an estimated cost of Sh1.7 billion in the city centre. Upper Hill, Mombasa Road, Waiyaki Way and Westlands, and Kilimani are emerging as favourite locations where many organisations are re-locating to from the overcrowded Nairobi CBD. The State is currently expanding roads in the commercial centre. “The impact of the sale – coupled with the presence of the Commercial Court and government offices in Upper Hill – will absolutely be huge, just like the case when the US Embassy set base in Gigiri. Right now many organisations are looking for out-of-town office space here,” said Mr Mutisya.
Of the 63 commercial developments approved by the City Council of Nairobi in 2009 with a total value of about Sh10 billion and 3.5 million sqft, Upper Hill attracted 35 per cent, Westlands 25 per cent, Mombasa Road 17 per cent and CBD 15 per cent, with Karen, Eastleigh, Ruaraka and other locations in the periphery sharing the rest.
