Why global firms are keen to open bases in Nairobi

Check in area at Jomo Kenyatta International Airport (JKIA). A Britam study shows that Nairobi is enjoying international limelight due to its global air connection and expanded infrastructure. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP

What you need to know:

  • Easing of trade barriers within East Africa as well as availability of highly skilled manpower in Kenya have made Nairobi a favourable location.
  • Britam study shows Nairobi was experiencing unrivalled growth in industrial, residential  and retail space development.
  • Mombasa-Nairobi railway line to be completed in June 2017 will triple Nairobi’s day population as well as commercial activities.

Multinationals are scrambling for space in Nairobi to put up their African headquarters, emboldening the capital city’s name as the gateway to East Africa.

A just-released report by financial investment firm Britam says Nairobi is enjoying international limelight due to its global air connection and expanded infrastructure that favours industrial activity, financial and transport services as well as exploration.

Britam chief executive Kenneth Kaniu said that easing of trade barriers within East Africa as well as availability of highly skilled manpower in Kenya have made Nairobi a favourable location for multi-country operations.

“Nairobi is taking off as a hub location for global corporations looking to establish offices in East Africa. The city is expanding from being the economic hub of East Africa to its biggest modern shopping destination. In 2016 and 2017, a further 1.3 million square feet of modern retail space will be delivered to the market,” he said.

Britam, which is currently putting final touches to its 31-floor “green” regional hub office block at Upper Hill, Nairobi, said its study had established that Nairobi was experiencing unrivalled growth in industrial, residential  and retail space development.

“Nairobi is experiencing a development boom across the majority of its commercial sectors that instructed the increased supply in office and retail sectors. This has redefined the skyline although some doubts exist around the relative demand for the new stock coming onto the market,” said the report.

EMERGING OPPORTUNITIES

Britam said that with the expected completion of the standard gauge railway, the industrial sector would be ripe for major developments “as it is currently under served, with demand outstripping supply. The current supply consists of old, inefficient quasi warehouse/office type structures.”

The Mombasa-Nairobi railway line to be completed in June 2017 will triple Nairobi’s day population as well as commercial activities that will benefit from ongoing road developments.

The line will also give manufacturers access to cheap raw materials, thereby boosting production within Nairobi-based factories.

Britam has operations in Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique and Malawi.

It said the anticipated launch of US-Kenya direct flights would be a major drive for more investors seeking a share of emerging opportunities in mining, manufacturing and an expanded African market.

The study said that Grade A office buildings had the highest implied yield of 12 per cent compared with Grade B and Grade C, which have yields of 10.2 per cent and 8.8 per cent, respectively.

Britam Towers will stand at 31 floors, easily becoming Africa’s third highest structure. It is set to be occupied in December.

While UAP’s 33 floors is currently the talk of town, it could soon be diminished in stature by the planned 66-floor Hass Twin Towers, currently under construction.

The Hass Towers are set to be completed in three years.