Kenya's retail real estate investment has grown five fold over the past decade owing to increased economic growth and infrastructure development.
Data collated by the Standard Bank shows that in the nine years from 2009 to 2017 the city added another 351,900 square metres of retail real estate across 17 developments. This is compared to the 72,000 square meters added during the period between 2000 and 2008.
Head of Real Estate Finance, Africa Regions at Standard Bank Gerhard Zeelie said that the burgeoning retail real estate has been backed by a unique retail and real estate sector coupled with the presence of regional and global banks.
“Nairobi’s retail market continues to change very quickly, adding new entrants all the time. These entrants are rapidly evolving and responding to
changed consumer behaviour,” he said. “Certainly, compared with a decade ago, Nairobi has a far broader range of retail real estate product and brand options.”
He added that although there was currently an oversupply in retail space, the country's long-term growth prospects are likely to reignite activity in Nairobi's real estate sector absorbing with uptake increasing over the medium term.
“Many of Nairobi’s newer developments have taken much longer to mature than initially anticipated - with vacancy rates only reducing below 10 per cent after two to three years’ operation,” he said.
As per the survey malls need to provide experiences for the whole family through brand mix and activity profile as well as the relative space allocation of retail versus leisure, entertainment and health and wellness.
The recently opened Two Rivers Mall is both a flagship development and bell weather for how Nairobi’s retail real estate market is evolving - as well as how it is likely to perform,” Zeelie said.
He added that the arrival of global retail brands such as Game and Carrefour has seen both an increase in investment and choice as well as higher levels of competition Kenya's retail space over the last 18 months.
“It will be interesting to see how these retailers perform over the next three to five years, especially given Nairobi’s very different and irregular shopping habits,” he said.
According to the report, experience, sophistication of the local real estate and financial services sectors, the sustained interest of global retail majors and the resilience and rapid digital evolution of the Kenyan consumer will boost future growth on Kenya's retail real estate sector.