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- Published on Friday, 20 March 2015 09:49
Sector to watch: Grade A office and retail space in Nairobi
Rebalancing of economic power in Africa
The decline of Cairo’s commercial influence at the northern end of Africa, and the realisation
by international businesses that they cannot run the entire continent from Johannesburg in the southern tip, has created a vacuum that Nairobi is eagerly filling.
With the arrival and expansion of a string of multinationals, the city is now firmly established as one of Africa’s leading hubs. Local developers have responded by building Grade A quality office space that is attracting
top-quality tenants paying dollar-denominated rents with leases that include fixed annual increases.
Generally, rents are perceived as good value by international firms, suggesting there is room for healthy future rental growth and also yield shift, which in turn is attracting global investors. In addition, newly discovered oil and gas deposits are creating something of an energy boom, while all sectors of Kenya’s economy, apart from tourism, are growing — GDP is rising at around 5.5% each year.
This is largely being driven by a burgeoning middle class hungry for Western-style goods and shopping experiences that, by and large, seems impervious to political controversies and terrorism activities. This year
should see the opening of around 1.8m square feet of First-World shopping malls in Nairobi, with new international retailers committing to the region for the first time.
Extract from The Wealth Report 2015| Knight Frank
