After false-starts, mixed use properties now take shape

Two Rivers Mall [File]

Live, work and play or in technical terms, mixed-use development has been touted as the long-awaited future for Kenya’s real estate.

Such a development has multiple uses including retail, residential, commercial, cultural spaces and hotel facilities interlinked to complement each other.

In the recent past, well-heeled local and foreign developers have been establishing such developments - tapping into an expanding middle class that aspires for spaces they can squeeze all their daily wants from.

Some of the classic examples in Kenya include Garden City, Two Rivers, Riverside Square, and the Global Trade Centre.

 

As property dealer Buyrentkenya.com notes, mixed-use developments provide an array of benefits to developers and tenants.

For developers, they lessen the risk, are easy to manage and are more profitable, leaving the developer with more flexibility to adapt to people’s changes.

Easier access to services also leads to property demand - providing spaces where people can live, work and play in one location.

Real Estate visited MiVida Homes, a larger extension of Actis’s Garden City, where residential apartments are being completed to complement the mixed-use development.

Here, apartments go for between Sh8 million and 16 million depending on the sizes from one bedroom to three bedrooms.

Mi Vida Homes Chief Financial Officer Anthony Kambiriri explains that they conducted market research with global consulting firm McKinsey to determine the resident of such a development.

This has seen them “step down” the food chain into the more middle, lower and affordable segment and aim to construct about 3,000 housing units in Nairobi.

Kambiriri says mixed-used developers are inspired by an expanding middle class with a young population.

Mi Vida Homes chief financial officer Antony Kambiriri [Courtesy]

“We do now have a lot of people compared to 20 years ago who have more money and these are younger people clamouring for better housing,” he said.

He says diaspora Kenyans also ache for the mixed-use developments owing to their past experiences with such plans abroad.

Older couples wanting a second home are also some of the residents.

“Young people driving cars also want to live in better housing. They are sure about the location, security, amenities and that it is an investment that will appreciate over time and they can rent it out,” he told Real Estate.

The various people who live in mixed-use developments include businesspersons, doctors, information technology experts and lawyers.

For example, the Garden City mixed-used development has a mall, residential area and a business centre with commercial offices.

East African Breweries Ltd is the anchor tenant of the business centre, while the telco giant Safaricom also purchased the property in the area.

Speaking at a webinar dubbed Building in Kenya: Are mixed-use Developments the Future of Real Estates?, experts weighed in on the trends shaping the developments.

TRV Developers Director Jayesh Chavda said developers and tenants were adapting to the western way of life -  being as much close to amenities as possible.

“We do see a huge market shift towards mixed-use development because people don’t want to travel far away. With the pandemic more people are even working from home,” he said.

Mixed-use developments have been touted to be more profitable due to their one-stop-shop facilities compared to single-use market investments.

Esther Karegi from Laser Properties said even though they had higher margins, developers had to tailor projects to what the market needed. “When you do that you’ll sell within the shortest time possible.”

“Developers are looking at what’s the best and possible highest return in terms of the sale price and also rentals,” she said.

Architectural Association of Kenya President Wilson Mugambi explained that one of the key things that needed to be sorted out in designing such developments is the planning and zoning areas for the projects.

“The planning element needs to factor in the lifestyle of people; you just can’t have a residential area without having a commercial zone in it.”

Infrastructure challenges such as roads, sanitation and lighting were also some of the concerns he raised.

A nagging question has been whether the residential houses are overpriced in some of the mixed-use developments.

Kambiriri said to tap into a majority of Kenyans, they would move towards affordable housing - selling units between Sh5 million and Sh10 million.

“There are a lot more people within that bracket who can afford; that’s where you have a larger population and larger impact,” he said.

The target person has a high earning capacity, able to get a mortgage facility or looking to invest.

There are others, he said, whose parents are paying half in deposits for their kids in such units to facilitate homeownership. He said the gap is on institutional investors who are well capitalised and deliver on time.

So far, they have sold more than 60 per cent of the phase one units with some committing early and plan to be fully sold by upon completion.