Why mixed use facilities are gaining interest

In Summary

• The idea is for inclusive live and work spaces that are not congested but cater for both the urban dweller.

Garden City development director Mumo Kianga
Garden City development director Mumo Kianga

Imagine living in a place where you wake up to fresh green lawns, for your gym you can run by the sidewalks all clean and spacious, with no hurrying Kenyans pushing you off the course. After work in the evenings, you could dance to the live band belting out lively African tunes as you stroll in the mall for some light shopping.  Then head back to your home within the gated vicinity, and join your children to play in the well done playgrounds. These are the dreamy ideas that multi-use construction investments are bringing to Africa, and Kenya.

Talk of Tatu City, Garden city, or Tilisi Developments, the idea is for inclusive live and work spaces that are not congested but cater for both the urban dweller. 

The writer spoke to Mumo Kianga, development director of Garden City to understand better what these ideas are all about:

Who is Mumo?

I am an architect by training, with a Bachelor of Architecture from University of Nairobi and a MSc in Real Estate from Henley Business School, University of Reading. Starting off as an architect over 10 years ago gave me excellent grounding on issues around buildability, design and cost efficiencies and also working with developers. I got the opportunity to work with Garden City back then, which at the time was the very first mixed use facility with offices, residences and shopping mall in Kenya. This afforded me a front-row seat in the regional commercial real estate development scene.

 What is your daily routine on the job like?

Every day is different. Project-wise, we are currently focused on the Garden City Business Park where we are constructing two new office buildings that just became ready for leasing in March. I work closely with the design and construction teams to ensure we keep to our ‘Grade A’ standards and stay within budget. I am also heavily involved in the design and development management of our new 600 middle income residential units. This is a new market push and we hope to be launching this very soon.

In terms of business strategy, I am involved in the long-term development vision which entails carrying out regular market research, financial evaluations, feasibility studies and managing our third party partnerships. I get involved in at least one of these activities daily. Most importantly I oversee the  project sustainability goals agenda which starts at the design stage of our built assets and ensuring all of our new projects meet our green goals.

Which challenges of the job do you face and how do you deal with them?

It has been an exciting five years at Garden City, we’ve achieved a lot in a very short time. I have just been promoted to Development Director, which I consider to be my greatest personal and professional achievement so far, but I have been privileged to work on wonderful and innovative projects alongside many talented and experienced people over the years. To be called upon now to provide leadership to these teams is a wonderful challenge.

The local real estate market has softened since we started the project, creating an uncertain environment for developers, so leadership and experience is even more important in our sector.  

What are some achievements that Garden City have done so far?

It was the first mixed use development so it’s already a bustling community with over 215 residents living in the apartments and townhouses, and a busy mall. I work and live at Garden City, so speaking from personal experience I love being able to pop into the mall for my groceries or going to the cinema with friends during the week or weekend, without leaving Garden City or having to get in a car. I don’t think you find this level of convenience anywhere else in Nairobi. That’s in addition to all the other amenities such as the gym, pool, children play areas and green open spaces for families, that guarantee any resident or homeowner at Garden City a live, work and play experience.

Star: Give us your views  about the state of ‘Grade A’ office properties in Kenya

Grade A rents across Nairobi have dropped overall and are currently at Sh131.46 ($1.3) for1.5/ft² per month, down from Sh141.46 ($1.4) for 1.6/sq ft per month in 2016/17. Grade A occupancies are now significantly higher than Grade B. So, we are seeing less new office developments being launched which will greatly help lease off current office space, and we’re looking forward to this playing out over the next 18 months.

Which issues affect development of quality real estate in Kenya and how would we be able to overcome them?

A significant amount of the office stock in Nairobi was developed before 2010. Most were built following old, inefficient standards giving poor quality work space. Many buildings are also ill-maintained and many have very low parking ratios, which is a huge consideration for businesses looking for quality offices. We therefore need to be mindful and continuously innovate our building standards.

The ongoing softening of the market also means that deal-making and structuring, particularly in the residential space has to change. Due to the market slow down one can no longer rely on sales income during construction.

The local retail sector, that forms a big chunk of commercial real estate clientele, is also undergoing a period of stabilisation which will take some time. We would therefore like to see more international retailers entering the market at the value end to provide the demand. In essence some of the larger mixed-use projects which are coming up, which will take another 3 to 4 years to develop, might need to be either scaled back or built out in phases to shore up the market risk.

 Are there emerging trends that will have positive impact on real estate in Kenya?

The drive by the Government to launch a sustainable affordable housing scheme is very positive and will be a great boost to the economy and construction sector. The real estate sector accounts for over 20 per cent of carbon emissions globally so the ongoing push by stakeholders to go green should be embraced by all developers. The longer term focus and development of infrastructure links such as expressways, roads, BRT, train/SGR links, are a must if we are to progress as a modern city.

How would you summarize the regional real estate Sector with regard to development of mixed-use properties?

Large mixed used schemes are a hot topic in East African real estate and there are now a number of similar schemes under development, but one of the challenges with any large mixed-use project is ensuring all of the components are commercially viable, properly integrated by design and the business plan is fully funded. We’re very fortunate to be funded by Actis, which is one of Africa’s leading private equity investors, with a strong track record and 72 years of international experience.