New shopping malls should be built in satellite towns and counties other than Nairobi where the middle class are increasingly settling, property analysts say.
Most malls are concentrated in the capital city, especially in suburbs, and many shoppers travel long distances to access them.
Real estate investment analysts say while developers build more malls in urban centres to tap the growing middle class market, the malls may in future not profit much since they have overlooked areas with high demand, where mid-income earners are settling.
The Shop Africa 2016 report by Knight Frank shows Nairobi has large retail property, and indicates there are more opportunities for developing “well-located, well-positioned malls”.
Johnson Denge from Cytonn Investments says focus needs to shift to the counties, most which have a maximum of three shopping malls. He, however, says county governments will first need to attract investors. “Most of these counties do not have zoning or planning regulations, so it becomes difficult to plan for investment,”
Denge says. Britam Asset Managers’ real estate tracker also shows big shopping malls are in oversupply in Nairobi, as investment opportunities shift to counties, industrial and residential properties.
“Beyond the Two Rivers Mall expected to open by the end of this year, no further retail space will be required in Nairobi. However there is enough space in Naivasha, Kisumu, Nakuru, Nanyuki and Mombasa for strip malls that range from 1,000 to 10,000 square feet,” said Britam Asset Manager CEO Kenneth Kaniu.
Nairobi Securities Exchange CEO Geoffrey Odundo said counties and developers should exploit Real Estate Investment Trusts to raise more capital.
NUMBER OF SHOPPING MALLS
IN MAJOR TOWNS
Nakuru county has two big malls in Naivasha - One Mall and Buffalo. Kisumu has Nakumatt City, United and West End among others, while Eldoret, Kisii and Machakos each have one mini-mall. Laikipia county has two malls in Nanyuki while Mombasa just like Nairobi has several large malls.
In Nairobi, we have Westgate, Sarit Centre, Garden City, Galleria, Thika Road Mall, Yaya Centre and The Hub. Neighbouring Kiambu has Two Rivers Mall in Ruaka.