Are Kenyans ready to shop and live in malls?

The luxury market is getting bigger and more elaborate, if the construction of Garden City in Nairobi is anything to go by. Its developers say, on completion, it will not look like anything the country is used to.

This is because it will be a destination mall, which means it will have the usual retail space, but also a business park, hotel, apartments and villas.

There is no doubt the Garden City project, which is along Thika Highway, is in line with global trends in the real estate market, but is Kenya ready for this type of development?

Retail development

“Nairobi is still lagging behind on retail space. If you look at the trend lately, there’s been an upsurge in retail development. Garden City is part of the Nairobi Integrated Master Plan to create nodes out of the Central Business District to aid in decongestion,” said Sakina Hassanali, HassConsult’s research and marketing manager.

The recently released Nairobi Commercial Office Property Report 2014, prepared by Mentor Management Ltd (MML), predicts that by the end of 2016, there will be more than 2.8 million square feet of office space — 19 per cent of the total stock of new buildings delivered since 2009 — lying vacant. This excess supply of office space is expected to originate from Upper Hill and Westlands starting in 2015.

Using the globally recognised Jones Lang LaSalle ‘Office Clock’, which captures the cyclical nature of the commercial building cycle, MML reports that Nairobi’s five office nodes of Kilimani and Ngong Road, Waiyaki Way, Gigiri, Karen and Thika Road were all still in a “rising phase”. However, Mombasa Road and the CBD are now in a bottoming out phase, which may see these areas start to rise again in coming years should planned infrastructure developments be forthcoming.

“If you look at the fabric that makes Nairobi, the middle class here is growing faster than the rest of Africa. Hence, Nairobi is quickly becoming a hub for international companies,” said Jenny Luesby, a Hass Index consultant.

“Initially, there weren’t any planning permissions for this kind of developments, but from the end of 2013, there has been an increase.”

According to Gituru Wainaina, the acting director general of the Vision 2030 Delivery Secretariat, it is important to decongest the city, and mixed-use malls like Garden City and Two Rivers, which is being constructed in Nairobi’s Runda, will help achieve this.

“Nairobi is the eighth most-visited African city, according to the 2014 Master Card Global Destination Cities Index. That, coupled with the fact that Nairobi is the United Nations headquarters, requires the market to keep up with global trends given the number of multinationals living here or visiting,” he said.

The same Master Card index forecasts that tourists to Nairobi will spend Sh28.53 billion this year, up 13 per cent from Sh25.29 billion spent in 2013.

When Business Beat visited Garden City’s construction site, we found phase one of the retail section was well underway, with anchor tenants already fitting their portion of the 33,500 square feet of total gross leasable space.

Young professionals

The mall — which is a Sh21.8 billion ($250 million) development backed by Actis, a private equity firm that invests in Africa, Asia and Latin America — will have two storeys, with a restaurant loft that overlooks a three-acre recreational park.

The park, as Michael Kingshott of Aspire, which is supervising the project’s implementation, said, will have children’s play areas, a walking trail as well as interactive water features.

“Time has become more precious. Mixed-use developments are particularly suited to young professionals, those with growing families and retirees,” Mr Kingshott said.

“They are also now being favoured by entrepreneurs who relish the freedom of working from home and then being able to hold a meeting just a few minutes’ walk away in nearby restaurants or cafés.

“You can simplify and streamline your life by integrating your home life with work, shopping and leisure, all within a lush and leafy environment.”

Within this 35-acre complex, there will be 420 residential houses — these will be two and three-bedroom apartment units, four-bedroom villas, and two and three-bedroom duplexes. The prices will range between Sh21 million and Sh44 million.

Heritage centre

The office block, with a total leasable space of 20,000 square metres, is targeted at multinational companies.

“Nairobi is the most important African business centre between the Mediterranean and Johannesburg,” said Anthony Havelock, who is head of agency for property agents Knight Frank.

Google, JPMorgan Chase, General Electric, Colgate-Palmolive among many other multinational companies, Mr Havelock said, have established offices in the city, citing that there is “a lot of growth in Africa”.

The mall’s ground floor will provide space for 100-plus retailers, with a section set apart from the mill of shoppers for banking halls.

The second floor will host an East African Breweries (EABL) heritage centre, where the firm’s brewing history will be show-cased by way of a photo exhibition. It will also serve food and drinks.

Garden City will have Africa’s largest solar panel-covered car canopy, with the power generated used to run the mall. The national grid will provide back up electricity. Its design also utilises natural ventilation, which eliminates the need for air conditioning.

The second phase of the project will include construction of a 170-bed capacity hotel.

The project is being worked on by a conglomerate of professionals, including Triad, Aspire and MML. Others are YMR, an East Africa-based quantity surveying firm, and AECOM, an infrastructure and support services firm.

These developers have taken into account the traffic needs of residents, as well as shoppers going in and out of the mall at peak and off-peak hours, in the design of the mall.

A 420-metre, two-lane boulevard entrance is currently being constructed to ease the flow of vehicles off Thika Highway and into Garden City.

Huge developments

“There are other huge developments like Garden City that are set to be constructed in Karen, along Mombasa Road, Limuru Road and Westlands,” Ms Luesby said.

The major drivers of the uptake of these projects, she added, are the availability of parking, followed by proximity to other amenities, thus enhancing convenience and minimising movement.

This was echoed by the MML report, which found that only one in 20 of the Nairobi office buildings surveyed met the international standard of four parking spaces for every 1,000 square feet of office space.

“Of the ones that meet the international standards ... these buildings command nearly twice the rental rates of those providing only one space per 1,000 square feet,” said MML CEO James Hoddel.

llimbe@standardmedia.co.ke